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, 2023.

Nasdaq, Inc.
(Registrant)
By:/s/ Adena T. Friedman
Name:Adena T. Friedman
Title:Chief Executive Officer
Date:February 23, 2023

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, 2023.

By:/s/ Adena T. Friedman
Name:Adena T. Friedman
Title:Chief Executive Officer and Chair of the Board
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:Director
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:Johan Torgeby
Title:Director
By:*
Name:Toni Townes-Whitley
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 SheetsF-4
Consolidated Statements of IncomeF-5
Consolidated Statements of Comprehensive IncomeF-6
Consolidated Statements of Changes in Stockholders' EquityF-7
Consolidated Statements of Cash FlowsF-8
Notes to Consolidated Financial StatementsF-9

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, 2022 and 2021, 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, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, 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, 2022, 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, 2023 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 Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

F-2

Market Technology Revenue Recognition
Description of the MatterAs described in Notes 2 and 3 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 recognized $562 million of Marketplace Technology revenue for the year ended December 31, 2022. Of this amount, a portion relates to market technology contracts where the Company allocates the contract transaction price to each performance obligation using its 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. Revenue recognized subject to such estimation was $75 million for the year ended December 31, 2022. 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 AuditWe 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 new customer agreements signed during the year, including change requests, 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 and 3 to the consolidated financial statements related to market technology revenue recognition.

/s/ Ernst & Young LLP

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

New York, New York

February 23, 2023

F-3

Nasdaq, Inc.

Consolidated Balance Sheets

(in millions, except share and par value amounts)

December 31, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$502$393
Restricted cash and cash equivalents2229
Default funds and margin deposits (including restricted cash and cash equivalents of $6,470 and $5,074, respectively)7,0215,911
Financial investments181208
Receivables, net677588
Other current assets201294
Total current assets8,6047,423
Property and equipment, net532509
Goodwill8,0998,433
Intangible assets, net2,5812,813
Operating lease assets444366
Other non-current assets608571
Total assets$20,868$20,115
Liabilities
Current liabilities:
Accounts payable and accrued expenses$185$185
Section 31 fees payable to SEC24362
Accrued personnel costs243252
Deferred revenue357329
Other current liabilities122115
Default funds and margin deposits7,0215,911
Short-term debt6641,018
Total current liabilities8,8357,872
Long-term debt4,7354,812
Deferred tax liabilities, net456406
Operating lease liabilities452386
Other non-current liabilities226234
Total liabilities14,70413,710
Commitments and contingencies
Equity
Nasdaq stockholders’ equity:
Common stock, $0.01 par value, 900,000,000 shares authorized, shares issued: 513,157,630 at December 31, 2022 and 520,256,817 at December 31, 2021; shares outstanding: 491,592,491 at December 31, 2022 and 500,038,905 at December 31, 202155
Additional paid-in capital1,4451,949
Common stock in treasury, at cost: 21,565,139 shares at December 31, 2022 and 20,217,912 shares at December 31, 2021(515)(437)
Accumulated other comprehensive loss(1,991)(1,587)
Retained earnings7,2076,465
Total Nasdaq stockholders’ equity6,1516,395
Noncontrolling interests1310
Total equity6,1646,405
Total liabilities and equity$20,868$20,115

See accompanying notes to consolidated financial statements.

F-4

Nasdaq, Inc.

Consolidated Statements of Income

(in millions, except per share amounts)

Year Ended December 31,
202220212020
Revenues:
Market Platforms$4,225$4,048$4,179
Capital Access Platforms1,6841,5681,287
Anti-Financial Crime306231116
Other revenues113943
Total revenues6,2265,8865,625
Transaction-based expenses:
Transaction rebates(2,092)(2,168)(2,028)
Brokerage, clearance and exchange fees(552)(298)(694)
Revenues less transaction-based expenses3,5823,4202,903
Operating expenses:
Compensation and benefits1,003938786
Professional and contract services140144137
Computer operations and data communications207186151
Occupancy104109107
General, administrative and other12585142
Marketing and advertising515739
Depreciation and amortization258278202
Regulatory336424
Merger and strategic initiatives828733
Restructuring charges153148
Total operating expenses2,0181,9791,669
Operating income1,5641,4411,234
Interest income714
Interest expense(129)(125)(101)
Net gain on divestiture of business—84—
Other income2815
Net income from unconsolidated investees315270
Income before income taxes1,4751,5341,212
Income tax provision352347279
Net income1,1231,187933
Net loss attributable to noncontrolling interests2——
Net income attributable to Nasdaq$1,125$1,187$933
Per share information:
Basic earnings per share$2.28$2.38$1.89
Diluted earnings per share$2.26$2.35$1.86
Cash dividends declared per common share$0.78$0.70$0.65

See accompanying notes to consolidated financial statements.

F-5

Nasdaq, Inc.

Consolidated Statements of Comprehensive Income

(in millions)

Year Ended December 31,
202220212020
Net income$1,123$1,187$933
Other comprehensive income (loss):
Foreign currency translation gains (losses)(375)(176)269
Income tax benefit (expense)(1)(32)(42)49
Foreign currency translation, net(407)(218)318
Employee benefit plan adjustment gains (losses)5(1)—
Employee benefit plan income tax provision(2)——
Employee benefit plan, net3(1)—
Total other comprehensive income (loss), net of tax(404)(219)318
Comprehensive income7199681,251
Comprehensive loss attributable to noncontrolling interests2——
Comprehensive income attributable to Nasdaq$721$968$1,251

____________

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

See accompanying notes to consolidated financial statements.

F-6

Nasdaq, Inc.

Consolidated Statements of Changes in Stockholders' Equity

(in millions)

Year Ended December 31,
202220212020
Shares$Shares$Shares$
Common stock500549554955
Additional paid-in capital
Beginning balance1,9492,5442,629
Share repurchase program(5)(308)(9)(468)(6)(222)
ASR agreement(1)(6)(325)(7)(475)——
Share-based compensation3106390387
Stock option exercises, net———1—2
Other issuances of common stock, net(2)12319257348
Ending balance1,4451,9492,544
Common stock in treasury, at cost
Beginning balance(437)(376)(336)
Other employee stock activity(1)(78)(1)(61)—(40)
Ending balance(515)(437)(376)
Accumulated other comprehensive loss
Beginning balance(1,587)(1,368)(1,686)
Other comprehensive income (loss)(404)(219)318
Ending balance(1,991)(1,587)(1,368)
Retained earnings
Beginning balance6,4655,6285,027
Impact of adoption of ASU 2016-13——(12)
Net income attributable to Nasdaq1,1251,187933
Cash dividends declared per common share(383)(350)(320)
Ending balance7,2076,4655,628
Total Nasdaq stockholders’ equity6,1516,3956,433
Noncontrolling interests
Beginning balance103—
Net activity related to noncontrolling interests373
Ending balance13103
Total Equity492$6,164500$6,405495$6,436

____________

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

(2) In 2021, other issuances of common stock primarily related to shares accelerated and issued upon the sale of our U.S. Fixed Income business.

See accompanying notes to consolidated financial statements.

F-7

Nasdaq, Inc.

Consolidated Statements of Cash Flows

(in millions)

Year Ended December 31,
202220212020
Cash flows from operating activities:
Net income$1,123$1,187$933
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization258278202
Share-based compensation1069087
Deferred income taxes389441
Extinguishment of debt163336
Net gain on divestiture of business—(84)—
Net income from unconsolidated investees(31)(52)(70)
Other reconciling items included in net income28632
Net change in operating assets and liabilities, net of effects of acquisitions:
Receivables, net(101)(6)(167)
Other assets98(140)26
Accounts payable and accrued expenses19(17)5
Section 31 fees payable to SEC181(162)92
Accrued personnel costs—2832
Deferred revenue1610615
Other liabilities(1)(45)(278)(12)
Net cash provided by operating activities1,7061,0831,252
Cash flows from investing activities:
Purchases of securities(322)(316)(283)
Proceeds from sales and redemptions of securities320285402
Proceeds from divestiture of business, net of cash divested—190—
Proceeds from sale of investment securities——22
Acquisition of businesses, net of cash and cash equivalents acquired(41)(2,430)(157)
Purchases of property and equipment(152)(163)(188)
Investments related to default funds and margin deposits, net(2)211(132)109
Other investing activities33(87)(27)
Net cash provided by (used in) investing activities49(2,653)(122)
Cash flows from financing activities:
Proceeds from (repayments of) commercial paper, net238420(391)
Repayments of debt and credit commitment(1,097)(804)(1,468)
Payment of debt extinguishment cost(16)(33)(36)
Proceeds from issuances of debt, net of issuance costs and utilization of credit commitment5418263,807
Repurchases of common stock(308)(468)(222)
ASR agreement(325)(475)—
Dividends paid(383)(350)(320)
Proceeds received from employee stock activity and other issuances232650
Payments related to employee shares withheld for taxes(78)(61)(40)
Default funds and margin deposits2,4402,330527
Other financing activities173
Net cash provided by financing activities1,0361,4181,910
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents(1,293)(331)353
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents1,498(483)3,393
Cash and cash equivalents, restricted cash and cash equivalents at beginning of period5,4965,9792,586
Cash and cash equivalents, restricted cash and cash equivalents at end of period$6,994$5,496$5,979
Reconciliation of Cash, Cash Equivalents and Restricted Cash and Cash Equivalents
Cash and cash equivalents$502$393$2,745
Restricted cash and cash equivalents222937
Restricted cash and cash equivalents (default funds and margin deposits)6,4705,0743,197
Total$6,994$5,496$5,979
Supplemental Disclosure Cash Flow Information
Interest paid$116$118$97
Income taxes paid, net of refund(1)$274$501$290

__________________________

(1) In 2021, includes payment of an acquired tax liability 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-8

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.

In 2022, we announced a new organizational structure which aligns our businesses more closely with the foundational shifts that are driving the evolution of the global financial system. In order to amplify our strategy, we aligned the Company more closely with evolving client needs. As a result, our four previous business segments, Market Technology, Investment Intelligence, Corporate Platforms and Market Services, have been changed to align with our new corporate structure that now includes three business segments: Capital Access Platforms, Market Platforms, and Anti-Financial Crime.

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

Market Platforms

Our Market Platforms segment includes our Trading Services and Marketplace Technology businesses. Our Trading Services business primarily includes revenues from equity derivatives trading, cash equity trading, Nordic fixed income trading & clearing, Nordic commodities and U.S. Tape plans data. 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 clearing, settlement and central depository services. 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.

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.

In addition to our trading and clearing services business as well as our carbon market offering, we also announced our planned launch of a new digital assets business to power the digital asset ecosystem in September 2022. The launch underpins Nasdaq’s ambition to advance and help facilitate broader institutional participation in digital assets by providing trusted and institutional-grade solutions, focused on enhanced custody, liquidity and integrity. Nasdaq Digital Assets is expected to initially develop an advanced custody solution. Nasdaq’s offering is subject to regulatory approval in applicable jurisdictions.

Our Marketplace Technology business includes our trade management services and our market technology businesses.

Trade management services provides market participants with a wide variety of alternatives for connecting to and accessing our markets for a fee. Our marketplaces may be accessed via a number of different protocols used for quoting, order entry, trade reporting and connectivity to various data feeds. We also provide colocation services to market participants, whereby we offer firms cabinet space and power to house their own equipment and servers within our data centers. Additionally, we offer a number of wireless connectivity offerings between select data centers using millimeter wave and microwave technology. In June 2022, we completed the wind-down of our Nordic broker services business.

Our market technology business is a leading global technology solutions provider and partner to exchanges, clearing organizations, central securities depositories, regulators, banks, brokers, buy-side firms and corporate businesses. Our 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.

Capital Access Platforms

Our Capital Access Platforms segment includes our Data & Listing Services, Index and Workflow & Insights businesses.

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

Our listing services business operates in the U.S. and Europe on 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 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.

F-9

As of December 31, 2022, there were 4,230 total listings on The Nasdaq Stock Market, including 528 ETPs. The combined market capitalization was approximately $19.3 trillion. In Europe, the Nasdaq Nordic and Nasdaq Baltic exchanges, together with Nasdaq First North, were home to 1,251 listed companies with a combined market capitalization of approximately $1.9 trillion.

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, 2022, 379 ETPs listed on 26 exchanges in over 20 countries tracked a Nasdaq index and accounted for $315 billion in AUM.

Workflow & Insights includes our analytics and corporate solutions businesses. Our analytics business provides asset managers, investment consultants and institutional asset owners with information and analytics to make data-driven investment decisions, deploy their resources more productively, and provide liquidity solutions for private funds. Through our eVestment and Solovis solutions, we provide a suite of cloud-based solutions that help institutional investors and consultants conduct pre-investment due diligence, and monitor their portfolios post-investment. The eVestment platform also enables asset managers to efficiently distribute information about their firms and funds to asset owners and consultants worldwide.

Through the Solovis platform, endowments, foundations, pensions and family offices transform how they collect and aggregate investment data, analyze portfolio performance, model and predict future outcomes, and share meaningful portfolio insights with key stakeholders. The Nasdaq Fund Network and Nasdaq Data Link are additional platforms in our suite of investment data analytics offerings and data management tools.

Our corporate solutions business includes our Investor Relations Intelligence, ESG Solutions and Governance Solutions products, 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, and various non-profit organizations to hospitals and healthcare systems. We help organizations enhance their ability to understand and expand their global shareholder base, improve corporate governance, and navigate the evolving ESG landscape through our suite of advanced technology, analytics, reporting and consulting services. In June 2022, we acquired Metrio, a provider of ESG data collection, analytics and reporting services based in Montreal, Canada. We plan to integrate Metrio’s SaaS platform into our suite of ESG solutions.

Anti-Financial Crime

Our Anti-Financial Crime segment provides anti-financial crime management solutions on a cloud-based platform to help detect, investigate, and report money laundering and financial fraud through Verafin, which was acquired in February 2021. Our Anti-Financial Crime segment 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; Nasdaq Market Surveillance, a market surveillance solution for markets and regulators. See “2021 Acquisition,” of Note 4, “Acquisitions and Divestiture,” for further discussion.

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.

F-10

The table below presents a summary of the 2020 Statements of Cash Flows as reported and as adjusted:

Year Ended December 31, 2020
As ReportedAdjustmentAdjusted
(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 financing activities1,3835271,910
Effect of exchange rate changes on cash, cash equivalents, restricted cash and cash equivalents16337353
Net increase in cash, cash equivalents, restricted cash and cash equivalents2,4209733,393
Cash, cash equivalents, restricted cash and cash equivalents at beginning of period3622,2242,586
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 equivalents37—37
Restricted cash and cash equivalents (Default funds and margin deposits)—3,1973,197
Total$2,782$3,197$5,979

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.

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 $242 million as of December 31, 2022 and $109 million as of December 31, 2021. Cash equivalents are carried at cost plus accrued interest, which approximates fair value due to the short maturities of these investments.

Restricted Cash

Restricted cash and cash equivalents, which was $22 million as of December 31, 2022 and $29 million as of December 31, 2021, 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, 2022 and 2021, restricted cash and cash equivalents primarily includes funds held for regulatory capital 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, anti-financial crime and marketplace 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.

F-11

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 $15 million as of December 31, 2022, $17 million as of December 31, 2021 and $21 million as of December 31, 2020. The change in the balance in 2022 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, 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, 2022, 2021 and 2020, 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.

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No impairments were recorded to reduce the carrying value of our equity method investments in 2022, 2021 or 2020.

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, 2022 and 2021, 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, 3 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.

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, or for internal use software, the fair value 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, 2022, these leases have varying lease terms with remaining maturities ranging from 2 to 14 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.

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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 exceeds 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, 2022, 2021 and 2020. 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.

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.

There were no material finite-lived impairment charges in 2022 and 2020. We recorded pre-tax, non-cash finite-lived intangible assets impairment charges of $14 million in 2021 related to a finite-lived intangible asset for customer relationships associated with the wind down of a previous acquisition. In addition, we also recorded pre-tax, non-cash property and equipment asset impairment charges of $8 million in 2022, $4 million in 2021 and $14 million in 2020.

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Revenue Recognition and Transaction-Based Expenses

Revenue From Contracts With Customers

Our revenue recognition policies under “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 are net of an allowance for credit losses of $15 million as of December 31, 2022 and $17 million as of December 31, 2021. 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.” Our deferred revenue primarily arises from contract liabilities related to our fees for annual and initial listings, workflow & insights, marketplace technology and anti-financial crime contracts. Deferred revenue is the only significant contract asset or liability as of December 31, 2022. 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 Platforms

Trading 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.

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. and Canadian cash equity trading, including 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.

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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.

U.S. Tape Plans

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. These revenues are presented on a net basis as all indicators of principal versus agent reporting under U.S. GAAP have been considered in analyzing the appropriate presentation of the revenue sharing. The following are primary indicators of net reporting:

  • We are the administrator for the UTP 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.

Marketplace Technology

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 offered 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 were generally billed and recognized monthly. As previously disclosed, in January 2020, we commenced an orderly wind-down of this broker services business. The wind-down was completed in the second quarter of 2022.

Market Technology

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

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. For the years ended December 31, 2022, 2021 and 2020 we recognized revenues of $75 million, $77 million and $90 million, respectively, related to the contracts described above.

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.

Capital Access Platforms

Data and Listings

Data revenues are earned from U.S. and European proprietary data products. We earn revenues primarily based on the number of data subscribers and distributors of our data. Data revenues are subscription-based and are recognized on a monthly basis.

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 corporate solutions products (when a company qualifies to receive certain complimentary IPO products 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.

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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 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.

Workflow & Insights

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.

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

Corporate solutions 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.

Anti-Financial Crime

Anti-Financial Crime revenues primarily consist of SaaS revenues. We enter into subscription agreements which allow customers access to our cloud platform, or in the case of certain surveillance customers, a connection to our servers to access the software. Subscription agreements are generally three years in term, payable in advance, with the option of automatic renewal for some products. 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.

Other Revenues

Other revenues include revenues related to our Nordic broker services business for which we completed the wind-down in June 2022, as well as revenues associated with our U.S. Fixed Income business, which was sold in June 2021. Prior to the closing of the transaction, these revenues were included in our Market Platforms and Capital Access Platforms segments. See “2021 Divestiture,” of Note 4, “Acquisitions and Divestiture,” to the consolidated financial statements for further discussion of this divestiture. Additionally, for the years ended December 31, 2021 and 2020, other revenues include revenues associated with the NPM business which we contributed in July 2021 to a standalone, independent company, of which we own the largest minority interest, together with a consortium of third-party financial institutions. Prior to July 2021, these revenues were included in our Capital Access Platforms segment. For the twelve months ended December 31, 2022, other revenues also include a transitional services agreement associated with a divested business.

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.

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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.

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-19

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.

Stock Split Effected in the Form of a Stock Dividend

On August 26, 2022, we effected a 3-for-1 stock split of the Company's common stock in the form of a stock dividend to shareholders of record as of August 12, 2022. The par value per share of our common stock remains $0.01 per share. All references made with respect to a number of shares or per share amounts throughout this Annual Report on Form 10-K have been retroactively adjusted to reflect the stock split.

Subsequent Events

We have evaluated subsequent events through the issuance date of this Annual Report on Form 10-K.

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, 2022, 2021 and 2020:

Year Ended December 31,
202220212020
(in millions)
Market Platforms
Trading Services, net$1,019$1,037$932
Marketplace Technology562545525
Capital Access Platforms
Data & Listing Services729680574
Index486459324
Workflow & Insights469429389
Anti-Financial Crime306231116
Other revenues113943
Revenues less transaction-based expenses$3,582$3,420$2,903

Substantially all revenues from the Capital Access Platforms and Anti-Financial Crime segments as well as our Marketplace Technology business were recognized over time for the years ended December 31, 2022, 2021 and 2020. For the years ended December 31, 2022, 2021 and 2020 approximately 93.1%, 93.6%, and 94.8% respectively, of Trading Services revenues were recognized at a point in time and 6.9%, 6.4% and 5.2%, 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 $15 million as of December 31, 2022 and $17 million as of December 31, 2021. 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 listing services contracts, our performance obligations range from three months to three years and there is no significant variable consideration.

F-20

Deferred revenue is the only significant contract asset or liability as of December 31, 2022. 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 Annual and Initial Listings, Workflow & Insights, Market Technology and Anti-Financial Crime 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, Anti-Financial Crime, and Workflow & Insights contracts, the portion of transaction price allocated to unsatisfied performance obligations is presented in the table below. To the extent consideration has been received, unsatisfied performance obligations would be included in the table below as well as deferred revenue.

The following table summarizes the amount of the transaction price allocated to performance obligations that are unsatisfied, for contract durations greater than one year, as of December 31, 2022:

Market TechnologyAnti-Financial CrimeWorkflow & InsightsTotal
(in millions)
2023$193$382$137$712
202415521479448
20251279030247
2026922711130
20275410872
2028+726—78
Total$693$729$265$1,687

4. ACQUISITIONS AND DIVESTITURE

We completed the following acquisitions and divestiture in 2022 and 2021. Financial results of each transaction are included in our consolidated financial statements from the date of each acquisition.

2022 Acquisition

In June 2022, we acquired Metrio, a provider of ESG data collection, analytics and reporting services based in Montreal, Canada. We plan to integrate Metrio’s SaaS platform into our suite of ESG solutions. Metrio is part of our Workflow & Insight business in our Capital Access Platforms segment.

2021 Divestiture

In June 2021, we sold our U.S. Fixed Income business, which was part of our FICC business within our Market Platforms 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 was included in net gain on divestiture of business in the Consolidated Statements of Income.

In connection with this sale, we issued approximately 6.2 million shares of Nasdaq common stock. Nasdaq used 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, in June 2021, the board of directors authorized an increase to the share repurchase program. These share repurchases were completed during the second quarter of 2022. 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 fraud, for an aggregate purchase price of $2.75 billion, subject to certain adjustments. The $2.75 billion purchase price included a cash payment of $102 million, reflected in cash from operating activities in our Consolidated Statements of Cash Flows, the release of which was subject to certain employment-related conditions following the closing of the transaction. During the fourth quarter of 2022, the parties to the transaction agreed that the remaining amount of the $102 million initial cash payment not yet paid would be accelerated and paid to the eligible former Verafin employees. The remaining expense was recorded as merger and strategic initiatives expense. Verafin is part of our Anti-Financial Crime segment.

The amounts in the table below represent the final allocation of the purchase price. The allocation of the purchase price was subject to revision during the measurement period, a period not to exceed 12 months from the acquisition date. Adjustments to the provisional values, which may include tax and other estimates, during the measurement period are recorded in the reporting period in which the adjustment amounts are determined. In 2021, we recorded a measurement period adjustment of $9 million. This adjustment resulted in an increase to both total net liabilities acquired and goodwill. This adjustment did not result in an impact to our Consolidated Statements of Income. The allocation of the purchase price for Verafin was finalized in the first quarter of 2022.

F-21

(in millions)
Goodwill$1,882
Acquired Intangible Assets815
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 RelationshipsTechnologyTrade NameTotal Acquired Intangible Assets
Intangible asset value (in millions)$532$246$37$815
Discount rate used7.5%7.5%7.5%
Estimated average useful life22 years7 years20 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 rate used reflects the amount of risk associated with the hypothetical cash flows for the developed technology relative to the overall business as discussed above in “Customer Relationships.”

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.”

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.

Pro Forma Results and Acquisition-Related Costs

The consolidated financial statements for the years ended December 31, 2022, 2021 and 2020 include the financial results of the above acquisitions from the date of the acquisitions. Pro forma financial results have not been presented since these acquisitions 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.

F-22

5. GOODWILL AND ACQUIRED INTANGIBLE ASSETS

Goodwill

The following table presents the changes in goodwill by business segment during the year ended December 31, 2022:

(in millions)
Market Platforms
Balance at December 31, 2021$3,129
Foreign currency translation adjustments(217)
Balance at December 31, 2022$2,912
Capital Access Platforms
Balance at December 31, 2021$4,292
Goodwill acquired40
Foreign currency translation and other adjustments(154)
Balance at December 31, 2022$4,178
Anti-Financial Crime
Balance at December 31, 2021$1,012
Foreign currency translation adjustments(3)
Balance at December 31, 2022$1,009
Total
Balance at December 31, 2021$8,433
Balance at Goodwill acquired40
Foreign currency translation adjustments(374)
Balance at December 31, 2022$8,099

In the table above, the December 31, 2021 balances reflect the revised goodwill following our corporate realignment. As of October 1, 2022, as required under ASC 350-20, the carrying value of goodwill was reassigned to our new reportable segments based on a relative fair value allocation approach.

As of December 31, 2022, the amount of goodwill that is expected to be deductible for tax purposes in future periods is $35 million.

Goodwill represents the excess of purchase price over the value assigned to the net assets, including identifiable intangible assets, of a business acquired. Goodwill is allocated to our reporting units based on the assignment of the fair values of each reporting unit of the acquired company. We test goodwill for impairment at the reporting unit level annually, or in interim periods if certain events occur indicating that the carrying amount may be impaired, such as changes in the business climate, poor indicators of operating performance or the sale or disposition of a significant portion of a reporting unit. There was no impairment of goodwill for the years ended December 31, 2022, 2021 and 2020; however, events such as prolonged economic weakness or unexpected significant declines in operating results of any of our reporting units or businesses, may result in goodwill impairment charges in the future.

Acquired Intangible Assets

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

December 31, 2022December 31, 2021
Finite-Lived Intangible Assets(in millions)
Gross Amount
Technology$304$295
Customer relationships2,0052,050
Trade names and other6060
Foreign currency translation adjustment(209)(143)
Total gross amount$2,160$2,262
Accumulated Amortization
Technology$(97)$(54)
Customer relationships(778)(711)
Trade names and other(17)(11)
Foreign currency translation adjustment12081
Total accumulated amortization$(772)$(695)
Net Amount
Technology$207$241
Customer relationships1,2271,339
Trade names and other4349
Foreign currency translation adjustment(89)(62)
Total finite-lived intangible assets$1,388$1,567
Indefinite-Lived Intangible Assets
Exchange and clearing registrations$1,257$1,257
Trade names121121
Licenses5252
Foreign currency translation adjustment(237)(184)
Total indefinite-lived intangible assets$1,193$1,246
Total intangible assets, net$2,581$2,813

There was no impairment of indefinite-lived intangible assets for the years ended December 31, 2022, 2021 and 2020. 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 2022 and 2020.

F-23

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

Year Ended December 31,
202220212020
(in millions)
Amortization expense$153$170$103

The table below presents the estimated future amortization expense (excluding the impact of foreign currency translation adjustments of $89 million as of December 31, 2022) of acquired finite-lived intangible assets as of December 31, 2022:

(in millions)
2023$159
2024153
2025151
2026148
2027147
2028+719
Total$1,477

6. INVESTMENTS

The following table presents the details of our investments:

December 31, 2022December 31, 2021
(in millions)
Financial investments$181$208
Equity method investments390363
Equity securities8667

Financial Investments

Financial investments are comprised of trading securities, primarily highly rated European government debt securities, of which $161 million as of December 31, 2022 and $162 million as of December 31, 2021, 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, 2022 and 2021, 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 impairments were recorded for the years end December 31, 2022, 2021 and 2020.

Net income recognized from our equity interest in the earnings and losses of these equity method investments, primarily OCC, was $31 million, $52 million and $70 million for the years ended December 31, 2022, 2021 and 2020, respectively. For the year ended December 31, 2022, lower equity interest in the earnings of OCC, as compared to 2021, was primarily driven by a reduction in the clearing fee rate that OCC charges its customers, partially offset by elevated U.S. industry trading volumes.

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 substantially all of our equity securities as they do not have a readily determinable fair value. No material adjustments were made to the carrying value of our equity securities for the years ended December 31, 2022, 2021 and 2020. As of December 31, 2022 and December 31, 2021, 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,
20222021
(in millions)
Data processing equipment and software$786$735
Furniture, equipment and leasehold improvements305288
Total property and equipment1,0911,023
Less: accumulated depreciation and amortization and impairment charges(559)(514)
Total property and equipment, net$532$509

Depreciation and amortization expense for property and equipment was $105 million for the year ended December 31, 2022, $108 million for the year ended December 31, 2021, and $99 million for the year ended December 31, 2020. 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 $8 million in 2022, $4 million in 2021 and $14 million in 2020. These charges are included in restructuring charges in the Consolidated Statements of Income. See Note 20, “Restructuring Charges,” for further discussion. There were no other material impairments of property and equipment recorded in 2022, 2021 and 2020.

As of December 31, 2022 and 2021, we did not own any real estate properties.

F-24

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, 2022 are reflected in the following table:

Balance at December 31, 2021AdditionsRevenue RecognizedAdjustmentsBalance at December 31, 2022
(in millions)
Market Platforms:
Market Technology$36$28$(30)$(5)$29
Capital Access Platforms:
Initial Listing14525(51)(3)116
Annual Listings23(2)(1)2
Workflow & Insights159166(152)(1)172
Anti-Financial Crime81106(79)—108
Other2512(13)(3)21
Total$448$340$(327)$(13)$448

In the above table:

  • Additions primarily reflect deferred revenue billed in the current period, net of recognition.

  • Revenue recognized includes revenue recognized during the current period that was included in the beginning balance.

  • Adjustments reflect foreign currency translation adjustments.

  • Other primarily includes deferred revenue from our Index business, data contracts and non-U.S. listing of additional shares fees. These fees are included in our Capital Access Platforms segment.

As of December 31, 2022, we estimate that our deferred revenue will be recognized in the following years:

Fiscal year ended:202320242025202620272028+Total
(in millions)
Market Platforms:
Market Technology$28$1$—$—$—$—$29
Capital Access Platforms:
Initial Listings4030201781116
Annual Listings2—————2
Workflow & Insights1693————172
Anti-Financial Crime1062————108
Other12531——21
Total$357$41$23$18$8$1$448

The timing of recognition of deferred revenue related to certain market technology contracts 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.

F-25

9. DEBT OBLIGATIONS

The following table presents the changes in the carrying amount of our debt obligations during the year ended December 31, 2022:

December 31, 2021AdditionsPayments, Foreign Currency Translation and AccretionDecember 31, 2022
(in millions)
Short-term debt:
Commercial paper$420$3,685$(3,441)$664
2022 Notes598—(598)—
2024 Notes499—(499)—
Total short-term debt$1,517$3,685$(4,538)$664
Long-term debt - senior unsecured notes:
2026 Notes498——498
2029 Notes676—(39)637
2030 Notes676—(39)637
2050 Notes486——486
2031 Notes643—1644
2040 Notes644——644
2033 Notes694—(41)653
2052 Notes—541—541
2022 Credit Facility(4)(2)1(5)
Total long-term debt$4,313$539$(117)$4,735
Total debt obligations$5,830$4,224$(4,655)$5,399

In the table above, the 2024 Notes were reclassified to short-term debt as of March 31, 2022.

The long-term debt senior unsecured notes in the table above, and discussion below, are listed based on their issuance date.

Commercial Paper Program

Our U.S. dollar commercial paper program is supported by our 2022 Credit Facility which provides liquidity support for the repayment of commercial paper issued through this program. See “2022 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 January 2022, we issued commercial paper to partially fund our ASR agreement. See “ASR Agreement,” of Note 12, “Nasdaq Stockholders' Equity.” In December 2022, we issued commercial paper to repay in full and redeem our 2022 Notes. For further discussion see “2022 Notes” below. As of December 31, 2022, we had $664 million outstanding under our commercial paper program.

Senior Unsecured Notes

Our 2040 Notes were issued at par. All of our other outstanding senior unsecured notes were issued at a discount. As a result of the discount, the proceeds received from each issuance were less than the aggregate principal amount. As of December 31, 2022, 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.

Early Extinguishment of 2024 Notes

In May 2014, Nasdaq issued the 2024 Notes, which paid interest semiannually at a rate of 4.25% per annum. In April 2022, we primarily used the net proceeds from the 2052 Notes to repay in full and redeem our 2024 Notes. For further discussion see “2052 Notes” below. In connection with the early extinguishment of the 2024 Notes, in April 2022 we recorded a pre-tax charge of $16 million, which primarily includes a make-whole redemption price premium.

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%.

F-26

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 $39 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, 2022.

2030 Notes

In February 2020, Nasdaq issued the 2030 Notes, which pay interest annually at a rate of 0.875% 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 $39 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, 2022.

2050 Notes

In April 2020, Nasdaq issued the 2050 Notes, which pay interest semi-annually at a rate of 3.25% per annum until April 28, 2050. Such rate may vary with Nasdaq's debt rating, to the extent Nasdaq is downgraded below investment grade, up to a rate not to exceed 5.25%.

2022, 2031 and 2040 Notes

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.”

2022 Notes

In December 2022, we used the net proceeds from commercial paper to repay, in full, the 2022 Notes. The 2022 Notes paid interest semi-annually in arrears, which began on June 21, 2021.

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 the 2033 Notes, which pay interest annually in arrears, at a rate of 0.900%, beginning on July 30, 2022.

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 $41 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, 2022.

2052 Notes

In March 2022, Nasdaq issued $550 million aggregate principal amount of 3.950% senior notes due in 2052, which pay interest semi-annually in arrears, beginning on September 7, 2022. The interest rate of 3.950% may vary with Nasdaq's debt rating, to the extent Nasdaq is downgraded below investment grade, up to a rate not to exceed 5.950%. The net proceeds from the 2052 Notes were $541 million after deducting the underwriting discount and expenses of the offering. We used the net proceeds from the 2052 Notes to redeem all of the 2024 Notes in April 2022.

Credit Facilities

2022 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). We amended and restated the 2020 Credit Facility in December 2022 with a new maturity date of December 16, 2027. Nasdaq intends to use funds available under the 2022 Credit Facility for general corporate purposes and to provide liquidity support for the repayment of commercial paper issued through the commercial paper program. Nasdaq is permitted to repay borrowings under our 2022 Credit Facility at any time in whole or in part, without penalty.

As of December 31, 2022, no amounts were outstanding on the 2022 Credit Facility. The $(5) million balance represents unamortized debt issuance costs which are being accreted through interest expense over the life of the credit facility.

F-27

Borrowings under the revolving credit facility and swingline borrowings bear interest on the principal amount outstanding at a variable interest rate based on either the SOFR (or a successor rate to SOFR), the base rate (as defined in the 2022 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 0.100% to 0.250%, depending on our credit rating, whether or not amounts have been borrowed. These commitment fees are included in interest expense and were not material for the years ended December 31, 2022 and 2021.

The 2022 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 2022 Credit Facility includes an option for Nasdaq to increase the available aggregate amount by up to $750 million, subject to the consent of the lenders funding the increase and certain other conditions.

Other Credit Facilities

Certain of our European subsidiaries have several other credit facilities, which are available in multiple currencies, primarily to support our Nasdaq Clearing operations in Europe, as well as to provide a cash pool credit line for one subsidiary. These credit facilities, in aggregate, totaled $184 million as of December 31, 2022 and $212 million as of December 31, 2021 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, 2022 and 2021.

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

Debt Covenants

As of December 31, 2022, 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 which is a voluntary defined contribution savings plan, for U.S. employees. Employees are immediately eligible to make contributions to the plan and are also eligible for an employer contribution match at an amount equal to 100.0% of the first 6.0% of eligible employee contributions. Savings plan expense is included in compensation and benefits expense in the Consolidated Statements of Income:

Year Ended December 31,
202220212020
(in millions)
Savings Plan expense$17$14$14

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:

Year Ended December 31,
202220212020
(in millions)
Retirement Plans expense$24$26$23

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.

As of December 31, 2022, the fair value of our U.S. defined-benefit pension plan's assets was $79 million and the benefit obligation was $81 million. As a result, the U.S. defined-benefit pension plan is underfunded by $2 million as of December 31, 2022.

As of December 31, 2021, the fair value of our U.S. defined-benefit pension plan's assets was $111 million and the benefit obligation was $112 million. As a result, the U.S. defined-benefit pension plan was underfunded by $1 million as of December 31, 2021.

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During 2022 and 2021, we did not make any contributions to our U.S. defined-benefit pension plan. For our SERP and other post-retirement benefit plans, the net underfunded liability was $28 million as of December 31, 2022 and $34 million as of December 31, 2021. 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, 2022, accumulated other comprehensive

loss for the Nasdaq Benefit Plans was $23 million reflecting an unrecognized net loss of $28 million, partially offset by an income tax benefit of $5 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:

PensionSERPPost-retirementTotal
Fiscal Year Ended:(in millions)
2023$8$5$—$13
202473—10
202573—10
202682—10
202782—10
2028 through 2032337242
$71$22$2$95

Nonqualified Deferred Compensation Plan

In June 2022, we established the Nasdaq, Inc. Nonqualified Deferred Compensation Plan. This plan provides certain eligible employees with the opportunity to defer a portion of their annual salary and bonus up to certain approval limits. All deferrals and associated earnings are our general unsecured obligations and were immaterial for the year ended December 31, 2022.

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. Generally, annual employee awards are granted on April 1st of each year.

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, 2022, 2021 and 2020, which is included in compensation and benefits expense in the Consolidated Statements of Income:

Year Ended December 31,
202220212020
(in millions)
Share-based compensation expense before income taxes$106$90$87

Common Shares Available Under Our Equity Plan

As of December 31, 2022, we had approximately 26.4 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.

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Summary of Restricted Stock Activity

The following table summarizes our restricted stock activity for the years ended December 31, 2022, 2021 and 2020:

Restricted Stock
Number of AwardsWeighted-Average Grant Date Fair Value
Unvested at December 31, 20194,460,268$25.79
Granted2,229,90029.98
Vested(1,498,071)24.32
Forfeited(274,944)27.06
Unvested at December 31, 20204,917,153$28.07
Granted1,523,23550.52
Vested(1,624,809)27.78
Forfeited(416,559)34.04
Unvested at December 31, 20214,399,020$35.39
Granted1,785,13857.65
Vested(1,525,442)31.22
Forfeited(278,203)42.07
Unvested at December 31, 20224,380,513$45.48

As of December 31, 2022, $111 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. The performance periods are complete for all PSUs granted under the one-year performance-based program, and all shares underlying these PSUs have vested as of December 31, 2022.

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 was 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.

Grants of PSUs that were issued in 2020 with a three-year performance period exceeded the applicable performance parameters. As a result, an additional 764,748 units above the original target were granted in the first quarter of 2023 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, 2022 and 2021:

Year Ended December 31,
20222021
Weighted-average risk free interest rate2.61%0.33%
Expected volatility30.04%30.30%
Weighted-average grant date share price$60.55$51.88
Weighted-average fair value at grant date$63.68$72.75

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.

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Summary of PSU Activity

The following table summarizes our PSU activity for the years ended December 31, 2022, 2021 and 2020:

PSUs
One-Year ProgramThree-Year Program
Number of AwardsWeighted-Average Grant Date Fair ValueNumber of AwardsWeighted-Average Grant Date Fair Value
Unvested at December 31, 2019951,753$26.962,392,353$32.77
Granted80,34028.06960,98435.81
Vested(415,269)26.03(902,301)27.19
Forfeited(108,180)27.47(21,069)32.75
Unvested at December 31, 2020508,644$27.782,429,967$36.04
Granted——1,081,70758.66
Vested(299,292)27.66(1,178,181)38.95
Forfeited(60,150)27.76(41,121)47.43
Unvested at December 31, 2021149,202$28.012,292,372$45.01
Granted——1,495,09245.66
Vested(142,459)28.02(1,735,842)32.57
Forfeited(6,743)27.85(85,080)52.27
Unvested at December 31, 2022—$—1,966,542$56.44

In the table above, the granted amount under the three-year program reflects additional awards granted based on overachievement of performance parameters.

As of December 31, 2022, total unrecognized compensation cost related to the three-year PSU program is $44 million and is expected to be recognized over a weighted-average period of 1.3 years.

Stock Options

In January 2022, in connection with a new five year employment agreement, our Chief Executive Officer received an aggregate of 613,872 performance-based non-qualified stock options, which will vest as follows:

  • 50% will vest contingent upon the achievement of certain performance conditions; and

  • 50% will vest five years after the grant date, subject to continued employment through such date.

The fair value of stock options are estimated using the Black-Scholes option-pricing model. These options expire 10 years after the date of grant. There were no stock option awards granted for the years ended December 31, 2021 and 2020.

A summary of stock option activity for the years ended December 31, 2022, 2021 and 2020 is as follows:

Number of Stock OptionsWeighted-Average Exercise PriceWeighted- Average Remaining Contractual Term (in years)Aggregate Intrinsic Value (in millions)
Outstanding at December 31, 20191,137,306$18.11
Exercised(255,585)7.97
Forfeited(1,662)6.98
Outstanding at December 31, 2020880,059$21.075.5$20
Exercised(73,227)8.43
Forfeited(381)8.43
Outstanding at December 31, 2021806,451$22.235.0$39
Granted613,87267.49
Outstanding at December 31, 20221,420,323$41.796.2$32
Exercisable at December 31, 2022806,451$22.234.0$32

The net cash proceeds from the exercise of 73,227 stock options for the year ended December 31, 2021 was $1 million. The net cash proceeds from the exercise of 255,585 stock options for the year ended December 31, 2020 was $2 million. The total pre-tax intrinsic value of stock options exercised was $3 million for the year ended December 31, 2021 and $9 million for the year ended December 31, 2020.

As of December 31, 2022, the aggregate pre-tax intrinsic value of the outstanding and exercisable stock options in the above table was $32 million and $32 million, respectively, and represents the difference between our closing stock price on December 31, 2022 of $61.35 and the exercise price, times the number of shares that would have been received by the option holder had the option holder exercised the stock options on that date. This amount can change based on the fair market value of our common stock. As of December 31, 2021, 0.8 million outstanding stock options were exercisable and the weighted-average exercise price was $22.23.

ESPP

We have an ESPP under which approximately 12.1 million shares of our common stock were available for future issuance as of December 31, 2022. 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.

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Year Ended December 31,
202220212020
Number of shares purchased by employees591,820605,274663,369
Weighted-average price of shares purchased$43.54$41.41$31.93
Compensation expense (in millions)$8$7$5

12. NASDAQ STOCKHOLDERS' EQUITY

Common Stock

As of December 31, 2022, 900,000,000 shares of our common stock were authorized, 513,157,630 shares were issued and 491,592,491 shares were outstanding. As of December 31, 2021, 900,000,000 shares of our common stock were authorized, 520,256,817 shares were issued and 500,038,905 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 21,565,139 shares of common stock in treasury as of December 31, 2022 and 20,217,912 shares as of December 31, 2021, most of which are related to shares of our common stock withheld for the settlement of employee tax withholding obligations arising from the vesting of restricted stock and PSUs.

Share Repurchase Program

As of December 31, 2022, our board of directors authorized an increase to our share repurchase program and the remaining aggregate authorized amount under the existing share repurchase program was $650 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, 2022:

Year Ended December 31, 2022
Number of shares of common stock repurchased5,465,595
Average price paid per share$56.26
Total purchase price (in millions)$308

In the table above, the number of shares of common stock repurchased excludes an aggregate of 1,347,227 shares withheld upon the vesting of restricted stock and PSUs for the year ended December 31, 2022.

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

ASR Agreement

In January 2022, we entered into an ASR agreement to repurchase $325 million of common stock. We received a total delivery of 5,629,161 shares of common stock and completed the ASR program during the first quarter of 2022.

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, 2022 and December 31, 2021, no shares of preferred stock were issued or outstanding.

Stock Split

See “Stock Split Effected in the Form of a Stock Dividend,” of Note 2, “Basis of Presentation and Principles of Consolidation.”

Cash Dividends on Common Stock

During 2022, our board of directors declared and paid the following cash dividends:

Declaration DateDividend Per Common ShareRecord DateTotal Amount PaidPayment Date
(in millions)
January 26, 2022$0.18March 11, 2022$88March 25, 2022
April 20, 20220.20June 10, 202298June 24, 2022
July 19, 20220.20September 16, 202299September 30, 2022
October 19, 20220.20December 2, 202298December 16, 2022
$383

The total amount paid of $383 million was recorded in retained earnings within Nasdaq's stockholders' equity in the Consolidated Balance Sheets at December 31, 2022.

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In January 2023, the board of directors approved a regular quarterly cash dividend of $0.20 per share on our outstanding common stock. The dividend is payable on March 31, 2023 to shareholders of record at the close of business on March 17, 2023. The estimated aggregate payment of this dividend is $98 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.

13. EARNINGS PER SHARE

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

Year Ended December 31,
202220212020
Numerator:(in millions, except share and per share amounts)
Net income attributable to common shareholders$1,125$1,187$933
Denominator:
Weighted-average common shares outstanding for basic earnings per share492,420,787497,698,377493,245,573
Weighted-average effect of dilutive securities:
Employee equity awards5,436,7787,389,1896,406,596
Contingent issuance of common stock——1,059,654
Weighted-average common shares outstanding for diluted earnings per share497,857,565505,087,566500,711,823
Basic and diluted earnings per share:
Basic earnings per share$2.28$2.38$1.89
Diluted earnings per share$2.26$2.35$1.86

In the table 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.

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 and 2020.

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, 2022 and December 31, 2021.

December 31, 2022
TotalLevel 1Level 2Level 3
(in millions)
European government debt securities$147$147$—$—
Corporate debt securities7—7—
State-owned enterprises and municipal securities7—7—
Swedish mortgage bonds20—20—
Total assets at fair value$181$147$34$—
December 31, 2021
TotalLevel 1Level 2Level 3
(in millions)
European government debt securities$144$144$—$—
Corporate debt securities20—20—
State-owned enterprises and municipal securities11—11—
Swedish mortgage bonds21—21—
Time deposits12—12—
Total assets at fair value$208$144$64$—

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, 2022, the majority of our debt obligations were fixed-rate obligations. We are exposed to changes in interest rates as a result of borrowings under our 2022 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, 2022, we had no outstanding borrowings under our 2022 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. As of December 31, 2022, we had $664 million outstanding under our commercial paper program. The fair value of our remaining debt obligations utilizing discounted cash flow analyses for our floating rate debt, and prevailing market rates for our fixed rate debt was $4.4 billion as of December 31, 2022 and $5.9 billion as of December 31, 2021. 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, 2022 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, 2022 and December 31, 2021, 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. 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.

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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 $29 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. The most recent hearing took place in October 2022, and we received the decision in November 2022. The court decided to reduce the administrative fine issued by the SFSA from 300 million SEK to 250 million SEK (approximately $24 million). In December 2022, Nasdaq Clearing appealed the decision of the Administrative Court of Appeal to the Supreme Administrative Court of Appeal. While we continue to firmly believe in the merit of our appeal, due to the 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. A charge for $29 million was recorded to regulatory expense in our Consolidated Statements of Income for the year ended December 31, 2021. As a result of the reduced fine communication in 2022, we have released $5 million to regulatory expense for the year ended December 31, 2022.

Default Fund Contributions and Margin Deposits

As of December 31, 2022, clearing member default fund contributions and margin deposits were as follows:

December 31, 2022
Cash ContributionsNon-Cash ContributionsTotal Contributions
(in millions)
Default fund contributions$1,345$115$1,460
Margin deposits5,6767,68313,359
Total$7,021$7,798$14,819

Of the total default fund contributions of $1,460 million, Nasdaq Clearing can utilize $1,377 million as capital resources in the event of a counterparty default. The remaining balance of $83 million pertains to member posted surplus balances.

Our clearinghouse holds material amounts of clearing member cash deposits which are held or invested primarily to provide security of capital while minimizing credit, market and liquidity risks. While we seek to achieve a reasonable rate of return, we are primarily concerned with preservation of capital and managing the risks associated with these deposits.

Clearing member cash contributions are maintained in demand deposits held at central banks and large, highly rated financial institutions or secured through direct investments, primarily central bank certificates and highly rated European government debt securities with original maturities primarily one year or less, reverse repurchase agreements and multilateral development bank debt securities. Investments in

reverse repurchase agreements range in maturity from 2 to 10 days and are secured with highly rated government securities and multilateral development banks. The carrying value of these securities approximates their fair value due to the short-term nature of the instruments and reverse repurchase agreements.

Nasdaq Clearing has invested the total cash contributions of $7,021 million as of December 31, 2022 and $5,911 million as of December 31, 2021, in accordance with its investment policy as follows:

December 31, 2022December 31, 2021
(in millions)
Demand deposits$4,775$3,061
Central bank certificates1,6952,013
Restricted cash and cash equivalents$6,470$5,074
European government debt securities222414
Reverse repurchase agreements192152
Multilateral development bank debt securities137271
Investments$551$837
Total$7,021$5,911

In the table above, the change from December 31, 2021 to December 31, 2022 includes currency translation adjustments of $1,255 million for restricted cash and cash equivalents and $75 million for investments.

For the years ended December 31, 2022, 2021 and 2020 investments related to default funds and margin deposits, net includes purchases of investment securities of $47,525 million, $41,098 million and $54,046 million, respectively, and proceeds from sales and redemptions of investment securities of $47,736 million, $40,966 million and $54,155 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

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member is active. Clearing members’ eligible contributions may include cash and non-cash contributions. Cash contributions received are maintained in demand deposits held at central banks and large, highly rated financial institutions or invested by Nasdaq Clearing, in accordance with its investment policy, either in central bank certificates, highly rated government debt securities, reverse repurchase agreements with highly rated government debt securities as collateral, or multilateral development bank debt securities. Nasdaq Clearing maintains and manages all cash deposits related to margin collateral. All risks and rewards of collateral ownership, including interest, belong to Nasdaq Clearing. Clearing members’ cash contributions are included in default funds and margin deposits in the 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, 2022, Nasdaq Clearing committed capital totaling $125 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, 2022.

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.

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Liability Waterfall

The liability waterfall is the priority order in which the capital resources would be utilized in the event of a default where the defaulting clearing member’s collateral and default fund contribution would not be sufficient to cover the cost to settle its portfolio. If a default occurs and the defaulting clearing member’s collateral, including cash deposits and pledged assets, is depleted, then capital is utilized in the following amount and order:

  • junior capital contributed by Nasdaq Clearing, which totaled $40 million as of December 31, 2022;

  • 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 $21 million as of December 31, 2022.

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.

During 2022, Nasdaq Clearing updated its recovery plan and rule book by introducing additional recovery tools, in line with the new European Union regulations for the recovery and resolution of central counterparties, which became effective during 2022.

In addition to the capital held to withstand counterparty defaults described above, Nasdaq Clearing also has committed capital of $64 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, 2022
(in millions)
Commodity and seafood options, futures and forwards$654
Fixed-income options and futures2,282
Stock options and futures141
Index options and futures43
Total$3,120

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, 2022 and 2021:

Year Ended December 31,
20222021
Commodity and seafood options, futures and forwards288,142536,252
Fixed-income options and futures21,992,12423,140,918
Stock options and futures18,619,95020,308,811
Index options and futures45,616,64737,860,187
Total86,516,86381,846,168

In the table above, the total volume in cleared power related to commodity contracts was 413 Terawatt hours (TWh) and 813 TWh for the years ended December 31, 2022 and 2021, respectively.

Resale and Repurchase Agreements Contracts Outstanding and Cleared

The outstanding contract value of resale and repurchase agreements was $120 million and $139 million as of December 31, 2022 and 2021, respectively. The total number of resale and repurchase agreements contracts cleared was 6,287,717 and 6,070,414 for the years ended December 31, 2022 and 2021, respectively.

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16. LEASES

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

LeasesBalance Sheet ClassificationDecember 31, 2022December 31, 2021
(in millions)
Assets:
Operating lease assetsOperating lease assets$444$366
Liabilities:
Current lease liabilitiesOther current liabilities$54$37
Non-current lease liabilitiesOperating lease liabilities452386
Total lease liabilities$506$423

The following table summarizes Nasdaq's lease cost:

Year Ended December 31,
202220212020
(in millions)
Operating lease cost$75$85$85
Variable lease cost322826
Sublease income(3)(4)(4)
Total lease cost$104$109$107

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, 2022
(in millions)
2023$71
202470
202560
202651
202748
2028+314
Total lease payments614
Less: interest(108)
Present value of lease liabilities$506

In the table above, interest is calculated using the interest rate for each lease. Present value of lease liabilities include the current portion of $54 million.

Total lease payments in the table above exclude $51 million of legally binding minimum lease payments for leases signed but not yet commenced.

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

December 31, 2022
Weighted-average remaining lease term (in years)10.5
Weighted-average discount rate3.6%

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

Year Ended December 31,
202220212020
(in millions)
Cash paid for amounts included in the measurement of operating lease liabilities$66$77$77
Lease assets obtained in exchange for operating lease liabilities$137$45$100

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,
202220212020
(in millions)
Domestic$1,216$1,299$898
Foreign259235314
Income before income tax provision$1,475$1,534$1,212

Income Tax Provision

The income tax provision consists of the following amounts:

Year Ended December 31,
202220212020
(in millions)
Current income taxes provision:
Federal$170$144$114
State674550
Foreign776474
Total current income taxes provision314253238
Deferred income taxes provision (benefit):
Federal368237
State6226
Foreign(4)(10)(2)
Total deferred income taxes provision389441
Total income tax provision$352$347$279

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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, 2022, the cumulative amount of undistributed earnings in these subsidiaries is $273 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.

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, 2022, 2021 and 2020 is as follows:

Year Ended December 31,
202220212020
Federal income tax provision at the statutory rate21.0%21.0%21.0%
State income tax provision, net of federal effect3.8%3.9%4.2%
Excess tax benefits related to employee share-based compensation(0.9)%(1.3)%(0.6)%
Non-U.S. subsidiary earnings0.5%0.3%0.5%
Tax credits and deductions(0.3)%(0.3)%(0.2)%
Change in unrecognized tax benefits1.1%0.6%(0.6)%
Other, net(1.3)%(1.6)%(1.3)%
Actual income tax provision23.9%22.6%23.0%

The increase in our effective tax rate in 2022 compared to 2021 was primarily due to an increase in state unrecognized tax benefits. The decrease in our effective tax rate in 2021 compared to 2020 was primarily 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 and excess tax benefits related to employee share-based compensation.

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.

President Biden signed into law the Inflation Reduction Act of 2022 on August 16, 2022. Nasdaq does not expect any material impact to the financial statements or our effective tax rate in future periods.

Deferred Income Taxes

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

December 31,
20222021
(in millions)
Deferred tax assets:
Deferred revenues$18$12
U.S. federal net operating loss5—
Foreign net operating loss124
State net operating loss31
Compensation and benefits4232
Tax credits3—
Federal benefit of uncertain tax positions96
Operating lease liabilities11899
Unrealized losses—2
Other3330
Gross deferred tax assets243186
Less: valuation allowance(4)(4)
Total deferred tax assets, net of valuation allowance$239$182
Deferred tax liabilities:
Amortization of software development costs and depreciation$(65)$(65)
Amortization of acquired intangible assets and goodwill(375)(322)
Investments(105)(99)
Unrealized gains(29)—
Operating lease assets(103)(84)
Other(15)(16)
Gross deferred tax liabilities$(692)$(586)
Net deferred tax liabilities$(453)$(404)
Reported as:
Non-current deferred tax assets$3$2
Deferred tax liabilities, net(456)(406)
Net deferred tax liabilities$(453)$(404)

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

We recognized a valuation allowance of $4 million as of December 31, 2022 and 2021 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:

JurisdictionDecember 31, 2021Expiration Date
(in millions)
Foreign NOL$12No expiration
Federal NOL5No expiration
State NOL32025-2040

Unrecognized Tax Benefits

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

Year Ended December 31,
202220212020
(in millions)
Beginning balance$57$42$48
Additions as a result of tax positions taken in prior periods13169
Additions as a result of tax positions taken in the current period9112
Reductions related to settlements with taxing authorities(7)(6)(6)
Reductions as a result of lapses of the applicable statute of limitations(2)(6)(11)
Ending balance$70$57$42

We had $70 million of unrecognized tax benefits as of December 31, 2022, $57 million as of December 31, 2021, and $42 million as of December 31, 2020 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 less than $1 million tax expense for the year ended December 31, 2022, and a tax benefit of $2 million for both years ended December 31, 2021 and 2020. Accrued interest and penalties, net of tax effect were $5 million as of December 31, 2022 and $4 million as of December 31, 2021.

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 2019 through 2021 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 2021. Non-U.S. tax returns are subject to examination by the respective tax authorities for the years 2017 through 2022. 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 $4 million as of December 31, 2022 and $5 million December 31, 2021. 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 $184 million as of December 31, 2022 and $212 million as of December 31, 2021 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.

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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.

Legal and Regulatory Matters

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.

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, and that any monetary fines or restrictions will not be material to our financial results. We cannot currently predict when our discussions with OFAC will conclude or the exact amount of any potential penalties imposed, but have accrued for an immaterial loss contingency.

CFTC Matter

In June 2022, NASDAQ Futures, Inc. (“NFX”), a non-operational, wholly-owned subsidiary of Nasdaq, received a telephonic “Wells Notice” from the staff of the CFTC relating to certain alleged potential violations by NFX of provisions of the Commodity Exchange Act and CFTC rules thereunder during the period beginning July 2015 through October 2018. The Wells Notice informed NFX that the CFTC staff has made, subject to consideration of NFX’s response, a preliminary determination to recommend that the CFTC authorize an enforcement action against NFX in connection with its former futures exchange business. Nasdaq sold NFX’s futures exchange business to a third-party in November 2019, including the portfolio of open interest in NFX contracts. During 2020, all remaining open interest in NFX contracts was migrated to other exchanges and NFX ceased operation. A Wells Notice is neither a formal charge of wrongdoing nor a final determination that the recipient has violated any law. NFX has submitted a response to the Wells Notice that contests all aspects of the Staff’s position, and is engaged in discussions with the CFTC staff concerning a potential resolution to the investigation, which could include a settlement of the matter. While Nasdaq believes NFX has a meritorious defense to any claims alleged by the CFTC staff, we are unable to predict the outcome of this matter and it could have a negative effect on our operating results or reputation, which could be material. Accordingly, we are unable to reasonably estimate any potential loss or range of loss, and therefore, we have not accrued for a loss contingency.

Nasdaq Commodities Clearing Default

In 2022, as a result of a decision received in the fourth quarter, we recorded an adjustment to reduce a previous accrual recorded in 2021 related to an administrative fine issued by the SFSA associated with the default which occurred in 2018. The charge and subsequent adjustment were included in regulatory expense in our Consolidated Statements of Income for the years ended December 31, 2022 and 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

In 2022, we announced a new organizational structure which aligns our businesses more closely with the foundational shifts that are driving the evolution of the global financial system. In order to amplify our strategy, we aligned the Company more closely with evolving client needs. During the fourth quarter of 2022, we began to manage, operate and provide our products and services in line with this new divisional structure. As a result, our four previous business segments, Market Technology, Investment Intelligence, Corporate Platforms and Market Services have been changed to align with our new corporate structure that includes three business segments: Market Platforms, Capital Access Platforms and Anti-Financial Crime. See Note 1, “Organization and Nature of Operations,” for further discussion of our reportable segments.

This Annual Report on Form 10-K presents our results in alignment with the new corporate structure. All periods presented are restated to reflect the new structure.

Our management allocates resources, assesses performance and manages these businesses as three separate segments. We evaluate the performance of our segments based on several factors, of which the primary financial measure is operating income. Results of individual businesses are presented based on our management accounting practices and structure. Our chief operating decision maker does not review total assets or statements of income below operating income by segments as key performance metrics; therefore, such information is not presented below.

The following table presents certain information regarding our business segments for the years ended December 31, 2022, 2021 and 2020:

Year Ended December 31,
202220212020
Market Platforms(in millions)
Total revenues$4,225$4,048$4,179
Transaction-based expenses(2,644)(2,466)(2,722)
Revenues less transaction-based expenses1,5811,5821,457
Depreciation and amortization*596455
Operating income859893784
Purchase of property and equipment8396125
Capital Access Platforms
Total revenues1,6841,5681,287
Depreciation and amortization*363430
Operating income916844651
Purchase of property and equipment505054
Anti-Financial Crime
Total revenues306231116
Depreciation and amortization*1086
Operating income804435
Purchase of property and equipment19179
Corporate Items
Total revenues113943
Depreciation and amortization153172111
Operating loss(291)(340)(236)
Consolidated
Total revenues$6,226$5,886$5,625
Transaction-based expenses(2,644)(2,466)(2,722)
Revenues less transaction-based expenses$3,582$3,420$2,903
Depreciation and amortization$258$278$202
Operating income$1,564$1,441$1,234
Purchase of property and equipment$152$163$188

*excludes amortization of acquired intangible assets.

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:

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*•*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: In October 2022, following our September announcement to realign our segments and leadership, we initiated a divisional alignment program with a focus on realizing the full potential of this structure. In 2019, we initiated the transition of certain technology platforms to advance our strategic opportunities as a technology and analytics provider and continue the realignment of certain business areas. See Note 20, “Restructuring Charges,” for further discussion of these plans. 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: For 2022 and 2021, we have included in corporate items the revenues and expenses of our U.S. Fixed Income business, which was previously included in our Market Platforms and Capital Access Platforms results. See “2021 Divestiture,” of Note 4, “Acquisitions and Divestiture,” for further discussion of this divestiture. Also included are the revenues and expenses of our Nordic broker services business for which we completed the wind-down in June 2022. For 2021 and 2020, we included in corporate items 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 Capital Access Platforms results.

  • Other items: We have included certain other charges or gains in corporate items, to the extent we believe they should be excluded when evaluating the ongoing operating performance of each individual segment. Other items include:

*◦*for the year ended December 31, 2022, accruals related to a legal matter, included in general, administrative and other expense in our Consolidated Statements of Income and a regulatory matter offset by the release of $5 million in relation to the reduction of the administrative fine issued by the SFSA included in regulatory expense in our Consolidated Statements of Income;

◦for the year ended December 31, 2021 a charge related to an administrative fine imposed by the SFSA. The 2022 and 2021 SFSA fine is 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. All charges and releases 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, 2022, 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, 2022 and 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,
202220212020
(in millions)
Revenues - divested/contributed businesses$11$39$43
Expenses:
Amortization expense of acquired intangible assets153170103
Merger and strategic initiatives expense828733
Restructuring charges153148
Regulatory matters133(6)
Provision for notes receivable——6
Extinguishment of debt163336
Charitable donations——17
Expenses - divested/contributed businesses51624
Other30918
Total expenses302379279
Operating loss$(291)$(340)$(236)

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 2022, 2021 and 2020. Revenues are classified based upon the location of the customer. Property and equipment information is based on the physical location of the assets.

Total RevenuesProperty and Equipment, Net
2022:(in millions)
United States$5,100$344
All other countries1,126188
Total$6,226$532
2021:
United States$4,822$325
All other countries1,064184
Total$5,886$509
2020:
United States$4,662$311
All other countries963164
Total$5,625$475

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 2022, 2021 and 2020.

20. RESTRUCTURING CHARGES

In October 2022, following our September announcement to realign our segments and leadership, we initiated a divisional alignment program with a focus on realizing the full potential of this structure. In connection with the program, we expect to incur $115 million to $145 million in pre-tax charges principally related to employee-related costs, consulting, asset impairments and contract terminations over a two-year period. We expect to achieve benefits, in the form of combined annual run rate operating efficiencies and revenue synergies of approximately $30 million annually by 2025. Costs related to the divisional alignment program will be recorded as restructuring charges in the Consolidated Statements of Income.

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 realignment of certain business areas. In connection with these restructuring efforts, we retired certain elements of our market 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 realignment. 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 2022 and 2019 restructuring plan charges in the Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 2020.

Year Ended December 31,
202220212020
(in millions)
Asset impairment charges$8$4$14
Consulting services31922
Contract terminations——3
Employee-related costs313
Other176
Total restructuring charges$15$31$48

F-44

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