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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the financial condition and results of operations of Nasdaq refers to the year over year comparison for the fiscal years ended December 31, 2024 and 2023 and should be read in conjunction with our consolidated financial statements and related notes included in this Form 10-K, as well as the discussion under “Part I, Item 1A. Risk Factors.” For further discussion of our growth strategy, products and services, and competitive strengths, see “Part I, Item 1. Business.” For a similar discussion comparing the fiscal years ended December 31, 2023 and 2022, refer to “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was previously filed with the SEC on February 21, 2024.

The period over period percentages below are calculated based on exact dollars, and therefore may not recalculate exactly using rounded numbers as presented in millions in the tables below.

EXECUTIVE OVERVIEW

Nasdaq is a global technology company serving corporate clients, investment managers, banks, brokers, and exchange operators as they navigate and interact with the global capital markets and the broader financial system. We aspire to deliver world-leading platforms that improve the liquidity, transparency, and integrity of the global economy. Our diverse offering of data, analytics, software, exchange capabilities, and client-centric services enables clients to optimize and execute their business vision with confidence.

We manage, operate and provide our products and services in three business segments: Capital Access Platforms, Financial Technology and Market Services.

2024 Highlights

  • Throughout 2024, Nasdaq substantially completed the integration of AxiomSL and Calypso.

  • In 2024, our Financial Technology segment delivered more than 10% ARR growth, reflecting an increase in new clients, cross-sells and upsells.

  • Nasdaq extended listing leadership in 2024 with its sixth consecutive year as the top U.S. exchange by number of IPOs and proceeds raised.

  • In 2024, Nasdaq achieved an 82% win rate among Nasdaq-eligible IPOs in the U.S., representing 180 deals and $23 billion in total proceeds raised.

  • In 2024, our Index business had $80 billion of net inflows, including $28 billion in the fourth quarter, and reported its fifth consecutive record quarter in ETP AUM, reaching $647 billion as of December 31, 2024. In addition, the Index business launched a record 116 new products with its clients.

  • In 2024, our Market Services segment achieved record net revenue. The Closing Cross set full year records in both share volume and notional value traded.

Macroeconomic environment

Our business performance can be positively or negatively impacted by a number of factors, including general economic conditions, current or expected inflation, interest rate fluctuations, market volatility, changes in investment patterns and priorities, regulatory changes, pandemics and other factors that are generally beyond our control. For example, higher overall U.S. trading volumes in 2024 as compared to 2023 has led to an increase in our U.S. Equity Derivative Trading and U.S. Cash Equity Trading revenues. Market factors also contributed to higher valuations in Nasdaq Indices. In our corporate solutions business, we managed through market challenges, as corporate buying cycles remained elongated throughout the year. To the extent that global or national economic conditions weaken and result in slower growth or recessions, our business may be negatively impacted. See “Part I, Item 1A. Risk Factors” for further discussion.

Nasdaq’s Operating Results

The following table summarizes our financial performance for the year ended December 31, 2024 compared to the same period in 2023 and for the year ended December 31, 2023 compared to the same period in 2022. The comparability of our results of operations between reported periods is impacted by the acquisition of Adenza in November 2023. See Note 4, “Acquisition,” to the consolidated financial statements for further discussion. For a detailed discussion of our results of operations, see “Segment Operating Results” below.

Year Ended December 31,Percentage Change
2024202320222024 vs. 20232023 vs. 2022
(in millions, except per share amounts)
Revenues less transaction-based expenses$4,649$3,895$3,58219.4%8.8%
Operating expenses2,8512,3172,01823.0%14.9%
Operating income$1,798$1,578$1,56413.9%0.8%
Net income attributable to Nasdaq$1,117$1,059$1,1255.5%(5.9)%
Diluted earnings per share$1.93$2.08$2.26(7.4)%(7.8)%
Cash dividends declared per common share$0.94$0.86$0.789.3%10.3%

In countries with currencies other than the U.S. dollar, revenues and expenses are translated using monthly average exchange rates. Impacts on our revenues less transaction-based expenses and operating income associated with fluctuations in foreign currency are discussed in more detail under “Item 7A. Quantitative and Qualitative Disclosures About Market Risk.”

The following chart summarizes our ARR (in millions):

59

ARR for a given period is the current annualized value derived from subscription contracts with a defined contract value. This excludes contracts that are not recurring, are one-time in nature, or where the contract value fluctuates based on defined metrics. ARR is currently one of our key performance metrics to assess the health and trajectory of our recurring business. ARR does not have any standardized definition and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. For AxiomSL and Calypso recurring revenue contracts, the amount included in ARR is consistent with the amount that we invoice the customer during the current period. Additionally, for AxiomSL and Calypso recurring revenue contracts that include annual values that increase over time, we include in ARR only the annualized value of components of the contract that are considered active as of the date of the ARR calculation. We do not include the future committed increases in the contract value as of the date of the ARR calculation. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.

The ARR chart includes:

▪Capital Access Platforms
◦Proprietary market data subscriptions and annual listing fees within our Data & Listing Services business
◦Index data subscriptions and guaranteed minimum on futures contracts within our Index business
◦Subscription contracts under our Workflow & Insights business
▪Financial Technology
◦Financial Crime Management Technology SaaS subscription contracts excluding one-time service requests
◦Regulatory Technology SaaS subscription and support contracts excluding one-time service requests
◦Capital Markets Technology SaaS subscription and support contracts excluding one-time service requests

The following chart summarizes our quarterly annualized SaaS revenues for Solutions, which comprises our Capital Access Platforms and Financial Technology segments, for December 31, 2024, 2023 and 2022 (in millions):

1656

SEGMENT OPERATING RESULTS

The following table presents our revenues by segment:

Year Ended December 31,Percentage Change
2024202320222024 vs. 20232023 vs. 2022
(in millions)
Capital Access Platforms$1,972$1,770$1,68211.4%5.2%
Financial Technology1,6211,09986447.5%27.1%
Market Services3,7713,1563,63220.9%(13.4)%
Other revenues363948(8.6)%(16.9)%
Total revenues$7,400$6,064$6,22622.0%(2.6)%
Transaction rebates(2,026)(1,838)(2,092)10.2%(12.1)%
Brokerage, clearance and exchange fees(725)(331)(552)119.1%(40.1)%
Total revenues less transaction-based expenses$4,649$3,895$3,58219.4%8.8%

The following chart presents our Capital Access Platforms, Financial Technology and Market Services segments as a percentage of our total revenues, less transaction-based expenses.

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Capital Access Platforms

The following tables present revenues and ARR from our Capital Access Platforms segment:

Year Ended December 31,Percentage Change
2024202320222024 vs. 20232023 vs. 2022
(in millions)
Data & Listing Services$754$749$7270.7%3.0%
Index70652848633.7%8.6%
Workflow & Insights5124934693.8%5.2%
Total Capital Access Platforms$1,972$1,770$1,68211.4%5.2%
As of December 31,
202420232022
ARR (in millions)$1,268$1,235$1,190

Data & Listing Services Revenues

The following tables present key drivers from our Data & Listing Services business:

Year Ended December 31,
202420232022
IPOs
The Nasdaq Stock Market180130161
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic14738
Total new listings
The Nasdaq Stock Market463330366
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic312363
As of December 31,
202420232022
Number of listed companies
The Nasdaq Stock Market4,0754,0444,230
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic1,1741,2181,251
ARR (in millions)691682664

In the table above:

  • For the years ended December 31, 2024, 2023 and 2022, IPOs included 50, 27 and 74 SPACs, respectively. The number of total listed companies on The Nasdaq Stock Market for the years ended December 31, 2024, 2023 and 2022 included 768, 600 and 528 ETPs, respectively.

  • IPOs, new listings (which includes IPOs) and total listed companies for exchanges that comprise Nasdaq Nordic and Nasdaq Baltic represent companies listed on the Nasdaq Nordic and Nasdaq Baltic exchanges and companies listed on the alternative markets of Nasdaq First North.

Data & Listing Services revenues increased in 2024 compared with the same period in 2023 as higher data usage, price increases on regulated data, higher initial listing fees and new data sales were partially offset by lower annual fees due to the impact of 2023 delistings and downgrades and lower amortization of prior period initial listing fees.

Index Revenues

The following table presents key drivers from our Index business:

As of or Year Ended December 31,
202420232022
Number of licensed ETPs401364348
TTM change in period end ETP AUM tracking Nasdaq indices (in billions)
Beginning balance$473$315$424
Net appreciation (depreciation)110128(142)
Net impact of ETP sponsor switches(16)(1)(1)
Net inflows803134
Ending balance$647$473$315
Annual average ETP AUM tracking Nasdaq indices (in billions)$558$396$351
ARR (in millions)$76$72$68

In the table above, TTM represents trailing twelve months. The number of listed ETPs as of December 31, 2023 and 2022 has been updated to reflect a revised methodology whereby an ETP listed on multiple exchanges is counted as one product, rather than formerly being counted per exchange. This change has no impact on reported AUM.

Index revenues increased in 2024 compared with the same period in 2023 primarily due to higher AUM in exchange traded products linked to Nasdaq indices and growth in trading volume on futures contracts linked to the Nasdaq-100 Index. The increase in 2024 also includes a $16 million one-time item related to a legal settlement to recoup revenue.

Workflow & Insights Revenues

The following table presents key drivers from our Workflow & Insights business:

As of or Year Ended December 31
202420232022
(in millions)
ARR$501$481$458
Quarterly annualized SaaS revenues431411388

Workflow & Insights revenues increased in 2024 compared with the same period in 2023 primarily due to an increase in analytics revenue, particularly our Data Link and eVestment product offerings.

Financial Technology

The following table presents revenues from our Financial Technology segment:

Year Ended December 31,Percentage Change
2024202320222024 vs. 20232023 vs. 2022
(in millions)
Financial Crime Management Technology$273$223$17622.2%26.5%
Regulatory Technology35221213066.3%63.5%
Capital Markets Technology99666455850.0%18.9%
Total Financial Technology$1,621$1,099$86447.5%27.1%

Financial Crime Management Technology Revenues

The following table presents key drivers for our Financial Crime Management Technology business:

As of or Year Ended December 31
202420232022
(in millions)
ARR and Quarterly annualized SaaS revenues$278$226$182

Financial Crime Management Technology revenues increased in 2024 compared with the same period in 2023 primarily due to revenue recognition from the full year impact of contracts signed in 2023, including higher value contracts, new sales and price increases to existing clients and new customer acquisitions, particularly small and medium-sized businesses.

Regulatory Technology Revenues

The following table presents key drivers for our Regulatory Technology business:

As of or Year Ended December 31
202420232022
(in millions)
ARR$354$325$130
Quarterly annualized SaaS revenues191165116

Regulatory Technology revenues increased in 2024 compared with the same period in 2023 primarily due to the inclusion of revenues from AxiomSL associated with our acquisition of Adenza and higher surveillance revenues, partially offset by a one-time revenue reduction recognized in the third quarter of 2024 related to a purchase accounting adjustment. See Note 3, “Revenue from Contracts with Customers,” to the consolidated financial statements for discussion on the measurement period adjustment.

Capital Markets Technology Revenues

The following table presents key drivers for our Capital Markets Technology business:

As of or Year Ended December 31
202420232022
(in millions)
ARR$868$799$499
Quarterly annualized SaaS revenues13410839

Capital Markets Technology revenues increased in 2024 compared with the same period in 2023. The increase was primarily due to the inclusion of revenues from Calypso associated with our acquisition of Adenza. The increase was also driven by higher trade management services revenues mainly driven by demand for additional colocation and connectivity services following our recent data center expansion and higher market technology license and support revenues, partially offset by lower market technology professional services revenue due to a large project delivery in the comparable period in 2023.

Market Services

The following table presents revenues from our Market Services segment:

Year Ended December 31,Percentage Change
2024202320222024 vs. 20232023 vs. 2022
(in millions)
Market Services$3,771$3,156$3,63220.9%(13.4)%
Transaction-based expenses:
Transaction rebates(2,026)(1,838)(2,092)10.2%(12.1)%
Brokerage, clearance and exchange fees(725)(331)(552)119.1%(40.1)%
Total Market Services, net$1,020$987$9883.4%(0.1)%

The following table presents net revenues by product from our Market Services segment:

Year Ended December 31,Percentage Change
2024202320222024 vs. 20232023 vs. 2022
(in millions)
U.S. Equity Derivative Trading$395$374$3715.7%0.7%
Cash Equity Trading4303973978.3%—%
U.S. Tape plans125141149(11.5)%(5.4)%
Other707571(6.2)%4.6%
Total Market Services, net$1,020$987$9883.4%(0.1)%

In the preceding table, Other includes Nordic fixed income trading & clearing, Nordic derivatives and Canadian cash equities trading.

U.S. Equity Derivative Trading

The following tables present total revenues, transaction-based expenses, and total revenues less transaction-based expenses as well as key drivers from our U.S. Equity Derivative Trading business:

Year Ended December 31,Percentage Change
2024202320222024 vs. 20232023 vs. 2022
(in millions)
U.S. Equity Derivative Trading Revenues$1,428$1,257$1,25213.6%0.4%
Section 31 fees87558956.9%(37.9)%
Transaction-based expenses:
Transaction rebates(1,030)(879)(878)17.1%0.2%
Section 31 fees(87)(55)(89)56.9%(37.9)%
Brokerage and clearance fees(3)(4)(3)(16.5)%13.9%
U.S. Equity Derivative Trading Revenues, net$395$374$3715.7%0.7%

Section 31 fees are recorded as U.S. equity derivative and cash equity trading revenues with a corresponding amount recorded in transaction-based expenses. We are assessed these fees from the SEC and pass them through to our customers in the form of incremental fees. Pass-through fees can increase or decrease due to rate changes by the SEC, our percentage of the overall industry volumes processed on our systems, and differences in actual dollar value traded. Section 31 fees increased in 2024 compared with the same period in 2023 primarily due to higher average SEC fee rates as a result of an increase in the SEC fee rate in May 2024. Since the amount recorded in revenues is equal to the amount recorded as Section 31 fees, there is no impact on our net revenues.

Year Ended December 31,
202420232022
U.S. equity options
Total industry average daily volume (in millions)44.440.438.2
Nasdaq PHLX matched market share10.0%11.3%11.6%
The Nasdaq Options Market matched market share5.5%6.1%8.0%
Nasdaq BX Options matched market share2.1%3.3%2.8%
Nasdaq ISE Options matched market share6.9%5.9%5.7%
Nasdaq GEMX Options matched market share2.6%2.4%2.3%
Nasdaq MRX Options matched market share2.7%2.0%1.6%
Total matched market share executed on Nasdaq’s exchanges29.8%31.0%32.0%

U.S. equity derivative trading revenues and U.S. equity derivative trading revenues, net increased in 2024 compared with the same period in 2023 primarily due to higher industry trading volumes, partially offset by lower overall matched market share executed on Nasdaq’s exchanges. U.S. equity derivative trading revenues also increased in 2024 compared with the same period in 2023 due to higher gross capture.

Transaction rebates, in which we credit a portion of the execution charge to the market participant, increased in 2024 compared with the same period in 2023 primarily due to higher rebate capture rate and industry trading volumes, partially offset by lower overall U.S. matched market share executed on Nasdaq’s exchanges.

Cash Equity Trading Revenues

The following tables present total revenues, transaction-based expenses, and total revenues less transaction-based expenses as well as key drivers and other metrics from our Cash Equity Trading business:

Year Ended December 31,Percentage Change
2024202320222024 vs. 20232023 vs. 2022
(in millions)
Cash Equity Trading Revenues$1,428$1,355$1,6055.4%(15.6)%
Section 31 fees611253436141.7%(42.0)%
Transaction-based expenses:
Transaction rebates(974)(939)(1,184)3.8%(20.8)%
Section 31 fees(611)(253)(436)141.7%(41.9)%
Brokerage and clearance fees(24)(19)(24)29.5%(22.3)%
Cash equity trading revenues, net$430$397$3978.3%—%

See the discussion in "U.S. Equity Derivative Trading" for an explanation of Section 31 fees for 2024 as compared with the same period in 2023.

Year Ended December 31,
202420232022
Total U.S.-listed securities
Total industry average daily share volume (in billions)12.211.011.9
Matched share volume (in billions)479.4455.6522.8
The Nasdaq Stock Market matched market share15.1%15.8%16.2%
Nasdaq BX matched market share0.3%0.4%0.5%
Nasdaq PSX matched market share0.2%0.3%0.8%
Total matched market share executed on Nasdaq’s exchanges15.6%16.5%17.5%
Market share reported to the FINRA/Nasdaq Trade Reporting Facility44.3%36.7%35.2%
Total market share59.9%53.2%52.7%
Nasdaq Nordic and Nasdaq Baltic securities
Average daily number of equity trades executed on Nasdaq’s exchanges651,455666,411908,813
Total average daily value of shares traded (in billions)$4.5$4.5$5.4
Total market share executed on Nasdaq’s exchanges71.9%71.0%71.5%

Cash equity trading revenues and cash equity trading revenues, net increased in 2024 compared with the same period in 2023 primarily due to higher U.S. industry trading volumes, partially offset by lower overall U.S. matched market share executed on Nasdaq's exchanges.

Transaction rebates increased in 2024 compared with the same period in 2023 primarily due to higher U.S. industry volumes, partially offset by lower overall U.S. matched market share executed on Nasdaq’s exchanges. For The Nasdaq Stock Market and Nasdaq PSX, we credit a portion of the per share execution charge to the market participant that provides the liquidity, and for Nasdaq BX, we credit a portion of the per share execution charge to the market participant that takes the liquidity.

U.S. Tape Plans

The following table presents revenues from our U.S. Tape plans business:

Year Ended December 31,Percentage Change
2024202320222024 vs. 20232023 vs. 2022
(in millions)
U.S. Tape plans$125$141$149(11.5)%(5.4)%

U.S. Tape plans revenues decreased in 2024 compared with the same period in 2023 primarily due to lower industry-wide usage volume and the impact of one-time industry-wide adjustments.

Other

Other includes Nordic fixed income trading and clearing, Nordic derivatives and Canadian cash equities trading. The following tables present revenues and a key driver from our Other business:

Year Ended December 31,Percentage Change
2024202320222024 vs. 20232023 vs. 2022
(in millions)
Other$70$75$71(6.2)%4.6%

In the preceding table, Other includes Canadian cash equity transaction rebates of $22 million, $20 million and $30 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Other revenues decreased in 2024 compared with the same period in 2023 primarily due to a decrease in Nordic derivatives revenues due to a non-recurring payment received in 2023, partially offset by an increase in Nordic fixed income trading and clearing.

Other Revenues

For the years ended December 31, 2024, 2023 and 2022, Other revenues include revenues related to our Nordic power trading and clearing business, following our announcement in June 2023 that we entered into an agreement to sell this business, which was subsequently terminated in June 2024. In January 2025, we entered into a new agreement to transfer existing open positions in our Nordic power derivatives trading and clearing business to a European exchange. The completion of this transaction is subject to customary regulatory approvals. Revenues from this business will continue to be reflected in Other revenues. Prior to June 2023, these revenues were included in our Market Services and Capital Access Platforms segments. For the years ended December 31, 2023 and 2022, Other revenues also include revenues related to a transitional services agreement associated with a divested business. For the year ended December 31, 2022, Other revenues also include revenues related to our Nordic broker services business for which we completed the wind-down in June 2022. Prior to June 2022, these revenues were included in our Market Services and Capital Access Platforms segments.

EXPENSES

Operating Expenses

The following table presents our operating expenses:

Year Ended December 31,Percentage Change
2024202320222024 vs. 20232023 vs. 2022
(in millions)
Compensation and benefits$1,324$1,082$1,00322.4%7.9%
Professional and contract services15212814018.4%(8.6)%
Technology and communication infrastructure28123320720.9%12.7%
Occupancy112129104(12.9)%23.7%
General, administrative and other109113125(3.6)%(9.8)%
Marketing and advertising54475116.4%(8.8)%
Depreciation and amortization61332325889.3%25.5%
Regulatory55343360.8%4.4%
Merger and strategic initiatives3514882(76.5)%79.7%
Restructuring charges116801544.3%454.5%
Total operating expenses$2,851$2,317$2,01823.0%14.9%

The increase in compensation and benefits expense in 2024 compared with the same period in 2023 was primarily driven by the inclusion of a full year of compensation costs related to Adenza employees as compared to two months in 2023, a pre-tax charge of $23 million resulting from the finalization of the termination of our pension plan and higher incentive compensation.

Headcount, including employees of non-wholly owned consolidated subsidiaries, increased to 9,162 employees as of December 31, 2024 from 8,525 employees as of December 31, 2023, primarily due to an increase in our Financial Technology segment as we support revenue growth and innovation.

Professional and contract services expense increased in 2024 compared with the same period in 2023 primarily due to an increase in expenses related to the inclusion of Adenza.

Technology and communication infrastructure expense increased in 2024 compared with the same period in 2023 primarily due to an increase in expenses related to the inclusion of Adenza and an increase in investment in technology expense related to our cloud initiatives and software licensing.

Occupancy expense decreased in 2024 compared with the same period in 2023 primarily due to $18 million in impairment charges and exit related costs recorded in 2023 following the abandonment of leased office space, partially offset by an increase in costs related to the inclusion of Adenza office space.

General, administrative and other expense decreased in 2024 compared with the same period in 2023 primarily due to a one-time accrual in 2023 related to a legal matter, partially offset by the inclusion of Adenza expense for a full year in 2024 and insurance recoveries related to legal matters recorded in 2023.

Marketing and advertising expense increased in 2024 compared with the same period in 2023 primarily due to higher client incentive spending resulting from higher IPO activity.

Depreciation and amortization expense increased in 2024 compared with the same period in 2023 primarily due to an increase in amortization related to the intangible assets acquired as part of the Adenza acquisition.

Regulatory expense increased in 2024 compared with the same period in 2023 primarily due to the settlement of a previously disclosed SFSA inquiry.

We have pursued various strategic initiatives and completed acquisitions and divestitures in recent years, which have resulted in expenses which would not have otherwise been incurred. These expenses generally include integration costs, as well as legal, due diligence and other third-party transaction costs and vary based on the size and frequency of the activities described above. For the years ended December 31, 2024 and 2023, these costs primarily relate to the Adenza acquisition. For the year ended December 31, 2024, these costs were partially offset by the recognition of a termination fee received by Nasdaq in 2024 related to the termination of the proposed divestiture of our Nordic power trading and clearing business.

Restructuring charges increased in 2024 compared with the same period in 2023 as a result of charges from our Adenza restructuring program, which we implemented to optimize our efficiencies as a combined organization, and our divisional alignment program, which was completed in September 2024.

We further expanded our Adenza restructuring program in the fourth quarter of 2024 to accelerate our momentum. In connection with this program, we expect to incur approximately $140 million in pre-tax charges. Actions taken as part of this program are expected to be completed by the end of 2025, while certain costs may be recognized in the first half of 2026. We expect to achieve benefits primarily in the form of expense synergies with annual cost savings of $140 million by the end of 2025, inclusive of the $80 million of net expense synergies related to the AxiomSL and Calypso acquisition.

The divisional alignment program concluded on September 30, 2024, incurring total pre-tax charges of $139 million over a two-year period, within the projected range of $115 million to $145 million. In addition to significantly boosting the scalability of our platforms, and thus revenue opportunities, we expect to achieve benefits from the 2022 divisional alignment program through combined annual run-rate operational efficiencies of approximately $30 million annually by 2025.

For further discussion related to both programs described above, see Note 20, “Restructuring Charges,” to the consolidated financial statements.

Non-Operating Income and Expenses

The following table presents our non-operating income and expenses:

Year Ended December 31,Percentage Change
2024202320222024 vs. 20232023 vs. 2022
(in millions)
Interest income$28$115$7(75.5)%1,538.3%
Interest expense(414)(284)(129)45.6%120.2%
Net interest expense(386)(169)(122)128.3%38.4%
Other income (loss)21(1)2(5,232.5)%(121.9)%
Net income (loss) from unconsolidated investees16(7)31(328.7)%(122.9)%
Total non-operating expense$(349)$(177)$(89)97.4%96.7%

The following table presents our interest expense:

Year Ended December 31,Percentage Change
2024202320222024 vs. 20232023 vs. 2022
(in millions)
Interest expense on debt$398$272$12046.3%126.8%
Accretion of debt issuance costs and debt discount139733.9%37.0%
Other fees33218.7%21.2%
Interest expense$414$284$12945.6%120.2%

Interest income decreased in 2024 compared with the same period in 2023 primarily due to a higher cash balance in 2023 during the period between the issuance of the senior unsecured notes in June 2023 and the close of the Adenza acquisition in November 2023.

Interest expense increased in 2024 compared with the same period in 2023 primarily due to debt issued in June 2023 to finance the Adenza acquisition. See “Financing of the Adenza Acquisition,” of Note 9, “Debt Obligations,” to the consolidated financial statements for further discussion.

Other income (loss) primarily represents realized and unrealized gains and losses from strategic investments related to our corporate venture program.

Net income (loss) from unconsolidated investees increased in 2024 compared with the same period in 2023 primarily due to higher income recognized from our equity method investment in OCC and lower losses from our equity method investment in NPM. See “Equity Method Investments,” of Note 6, “Investments,” to the consolidated financial statements for further discussion.

Tax Matters

The following table presents our income tax provision and effective tax rate:

Year Ended December 31,Percentage Change
2024202320222024 vs. 20232023 vs. 2022
(in millions)
Income tax provision$334$344$352(2.8)%(2.1)%
Effective tax rate23.1%24.6%23.9%

For further discussion of our tax matters, see Note 17, “Income Taxes,” to the consolidated financial statements.

NON-GAAP FINANCIAL MEASURES

In addition to disclosing results determined in accordance with U.S. GAAP, we also provide non-GAAP net income attributable to Nasdaq and non-GAAP diluted earnings per share in this Annual Report on Form 10-K. Management uses this non-GAAP information internally, along with U.S. GAAP information, in evaluating our performance and in making financial and operational decisions. We believe our presentation of these measures provides investors with greater transparency and supplemental data relating to our financial condition and results of operations. In addition, we believe the presentation of these measures is useful to investors for period-to-period comparisons of our ongoing operating performance.

These measures are not in accordance with, or an alternative to, U.S. GAAP, and may be different from non-GAAP measures used by other companies. In addition, other companies, including companies in our industry, may calculate such measures differently, which reduces their usefulness as comparative measures. Investors should not rely on any single financial measure when evaluating our business. This non-GAAP information should be considered as supplemental in nature and is not meant as a substitute for our operating results in accordance with U.S. GAAP. We recommend investors review the U.S. GAAP financial measures included in this Annual Report on Form 10-K, including our consolidated financial statements and the notes thereto. When viewed in conjunction with our U.S. GAAP results and the accompanying reconciliation, we believe these non-GAAP measures provide greater transparency and a more complete understanding of factors affecting our business than U.S. GAAP measures alone.

We understand that analysts and investors regularly rely on non-GAAP financial measures, such as non-GAAP net income attributable to Nasdaq and non-GAAP diluted earnings per share, to assess operating performance. We use non-GAAP net income attributable to Nasdaq and non-GAAP diluted earnings per share because they highlight trends more clearly in our business that may not otherwise be apparent when relying solely on U.S. GAAP financial measures, since these measures eliminate from our results specific financial items that have less bearing on our ongoing operating performance.

The following table presents reconciliations between U.S. GAAP net income attributable to Nasdaq and diluted earnings per share and non-GAAP net income attributable to Nasdaq and diluted earnings per share:

Year Ended December 31,
202420232022
(in millions, except per share amounts)
U.S. GAAP net income attributable to Nasdaq$1,117$1,059$1,125
Non-GAAP adjustments:
Adenza purchase accounting adjustment34——
Amortization expense of acquired intangible assets488206153
Merger and strategic initiatives expense3514882
Restructuring charges1168015
Lease asset impairments—25—
Extinguishment of debt4—16
Net (income) loss from unconsolidated investees(16)7(29)
Legal and regulatory matters201226
Pension settlement charge239—
Other (income) loss(15)212
Total non-GAAP adjustments$689$508$265
Total non-GAAP tax adjustments(208)(134)(66)
Tax on intra-group transfer of IP assets33——
Total non-GAAP adjustments, net of tax$514$374$199
Non-GAAP net income attributable to Nasdaq$1,631$1,433$1,324
U.S. GAAP effective tax rate23.1%24.6%23.9%
Total adjustments from non-GAAP tax rate0.7%0.4%0.1%
Non-GAAP effective tax rate23.8%25.0%24.0%
Weighted-average common shares outstanding for diluted earnings per share579.2508.4497.9
U.S. GAAP diluted earnings per share$1.93$2.08$2.26
Total adjustments from non-GAAP net income0.890.740.40
Non-GAAP diluted earnings per share$2.82$2.82$2.66

We believe that excluding the following items from the non-GAAP net income attributable to Nasdaq provides a more meaningful analysis of Nasdaq’s ongoing operating performance and comparisons in Nasdaq’s performance between periods:

*•*Adenza purchase accounting adjustment: As discussed in Note 3, “Revenue from Contracts with Customers,” to the consolidated financial statements, during the third quarter of 2024, as part of finalizing the purchase accounting of the Adenza acquisition, a one-time revenue reduction of $32 million was recorded, reflecting the net impact of the accounting change on AxiomSL subscription revenue from the date of the Adenza acquisition. We have excluded the reduction of $34 million as this relates to the prior year impact of this change from our non-GAAP results. We have not excluded the $2 million offsetting impact of this change as it is related to current year results.

*•*Amortization expense of acquired intangible assets: We amortize intangible assets acquired in connection with various acquisitions. Intangible asset amortization expense can vary from period to period due to episodic acquisitions completed, rather than from our ongoing business operations. As such, if intangible asset amortization is included in performance measures, it is more difficult to assess the day-to-day operating performance of the businesses and the relative operating performance of the businesses between periods.

*•*Merger and strategic initiatives expense: We have pursued various strategic initiatives and completed acquisitions and divestitures in recent years that have resulted in expenses which would not have otherwise been incurred. The frequency and the amount of such expenses vary significantly based on the size, timing and complexity of the transaction. These expenses primarily include integration costs, as well as legal, due diligence and other third-party transaction costs. For the years ended December 31, 2024 and 2023, these costs primarily relate to the Adenza acquisition. For the year ended December 31, 2024, these costs were partially offset by the recognition of a termination fee received by Nasdaq in 2024, related to the termination of the proposed divestiture of our Nordic power trading and clearing business.

  • Restructuring charges: In the fourth quarter of 2023, following the closing of the Adenza acquisition, our management approved, committed to and initiated a restructuring program, to optimize our efficiencies as a combined organization. We further expanded this restructuring program in the fourth quarter of 2024 to accelerate our momentum. In October 2022, following our September 2022 announcement to realign our segments and leadership, we initiated a divisional alignment program with a focus on realizing the full potential of this structure. We completed this program in September 2024. See Note 20, “Restructuring Charges,” to the consolidated financial statements for further discussion of these programs.

  • Net (income) loss from unconsolidated investees: We exclude our share of the earnings and losses of our equity method investments. This provides a more meaningful analysis of Nasdaq’s ongoing operating performance or comparisons in Nasdaq’s performance between periods. See “Equity Method Investments,” of Note 6, “Investments,” to the consolidated financial statements for further discussion.

  • Other items: We have excluded certain other charges or gains, including certain tax items, that are the result of other non-comparable events to measure operating performance. We believe the exclusion of such amounts allows management and investors to better understand the ongoing financial results of Nasdaq. Other significant items include:

**◦**Lease asset impairments: For the year ended December 31, 2023, other items include impairment charges related to our operating lease assets and leasehold improvements associated with vacating certain leased office space, which are recorded in occupancy and depreciation and amortization expense in the Consolidated Statements of Income. See Note 16, “Leases,” to the consolidated financial statements for further discussion.

◦Extinguishment of debt: For the years ended December 31, 2024 and 2022 this includes a loss on extinguishment of debt, which is recorded under general, administrative and other expense in the Consolidated Statements of Income. See Note 9, “Debt Obligations,” to the consolidated financial statements for further discussion.

**◦**Legal and regulatory matters: For the year ended December 31, 2024, other items primarily include the settlement of a previously disclosed SFSA inquiry, and accruals related to certain legal matters. For 2023 and 2022, other items also includes accruals related to certain legal matters. For 2023, these charges were partially offset by insurance recoveries related to certain legal matters. The charges and related insurance recoveries are recorded in professional and contract services and general, administrative and other expense in the Consolidated Statements of Income. For 2022, this also includes a charge related to an administrative fine imposed by the SFSA related to the clearing default that occurred in 2018. This charge was included in regulatory expense in the Consolidated Statements of Income.

*◦*Pension settlement charge: For the years ended December 31, 2024 and 2023, we recorded a pre-tax charge as a result of settling our U.S. pension plan. The plan was terminated and partially settled in 2023, with final settlement occurring during the first quarter of 2024. The pre-tax charge is recorded in compensation and benefits expense in the Consolidated Statements of Income. See Note 10, “Retirement Plans,” to the consolidated financial statements for further discussion.

**◦**Other (income) loss: For the years ended December 31, 2024 and 2022, other items include net gains from strategic investments entered into through our corporate venture program, which are included in other income (loss) in the Consolidated Statements of Income. For 2023, other items included certain financing costs related to the Adenza acquisition and a net loss from a strategic investments entered into through our corporate venture program.

  • Significant tax items: The non-GAAP adjustment to the income tax provision for all periods primarily includes the tax impact of each non-GAAP adjustment. In addition, for the year ended December 31, 2024, tax items also include a one-time net tax expense of $33 million related to the completion of an intra-group transfer of certain intellectual property, or IP, assets to our U.S. headquarters as well as a tax benefit related to return to provision adjustments and release of tax reserves due to lapse in statute of limitations.

LIQUIDITY AND CAPITAL RESOURCES

Historically, we have funded our operating activities and met our commitments through cash generated by operations, augmented by the periodic issuance of debt. Currently, our cost and availability of funding remain healthy. We continue to prudently assess our capital deployment strategy through balancing internal investments, debt repayments, and shareholder return activity, including dividends and share repurchases, and potential acquisitions.

We expect that our current cash and cash equivalents combined with cash flows provided by operating activities, supplemented with our borrowing capacity and access to additional financing, including our revolving credit facility and our commercial paper program, provides us additional flexibility to meet our ongoing obligations and the capital deployment strategic actions described above, while allowing us to invest in activities and product development that support the long-term growth of our operations.

Principal factors that could affect the availability of our internally-generated funds include:

  • deterioration of our revenues in any of our business segments;

  • changes in regulatory and working capital requirements; and

  • an increase in our expenses.

Principal factors that could affect our ability to obtain cash from external sources include:

  • operating covenants contained in our credit facilities that limit our total borrowing capacity;

  • credit rating downgrades, which could limit our access to additional debt;

  • a significant decrease in the market price of our common stock; and

  • volatility or disruption in the public debt and equity markets.

The following table summarizes selected measures of our liquidity and capital resources:

December 31, 2024December 31, 2023
(in millions)
Cash and cash equivalents$592$453
Financial investments184188
Working capital(116)71

The decrease in working capital is primarily driven by the reclassification of the 2025 Notes to short-term debt in 2024 and an increase in current deferred revenue, partially offset by a decrease in commercial paper, net, as further described below under “Debt Obligations.”

Cash and Cash Equivalents

Cash and cash equivalents includes all non-restricted cash in banks and highly liquid investments with original maturities of 90 days or less at the time of purchase. The balance retained in cash and cash equivalents is a function of anticipated or possible short-term cash needs, prevailing interest rates, our investment policy, and alternative investment choices. As of December 31, 2024, our cash and cash equivalents of $592 million were primarily invested in money market funds, commercial paper and bank deposits.

Repatriation of Cash

Our cash and cash equivalents held outside of the U.S. in various foreign subsidiaries totaled $181 million as of December 31, 2024 and $236 million as of December 31, 2023. The remaining balance held in the U.S. totaled $411 million as of December 31, 2024 and $217 million as of December 31, 2023.

Cash Flow Analysis

The following table summarizes the changes in cash flows:

Year Ended December 31,
202420232022
Net cash provided by (used in):(in millions)
Operating activities$1,939$1,696$1,706
Investing activities(953)(5,994)49
Financing activities(2,561)4,2201,036

Net Cash Provided by Operating Activities

Net cash provided by operating activities primarily consists of net income adjusted for certain non-cash items, including, but not limited to, depreciation and amortization expense, expense associated with share-based compensation, deferred income taxes and the effects of changes in working capital. Changes in working capital include changes in accounts receivable and deferred revenue which are impacted by the timing of customer billings and related collections from our customers; accounts payable and accrued expenses due to timing of payments; accrued personnel costs, which are impacted by employee performance targets and the timing of payments related to employee bonus incentives; and Section 31 fees payable to the SEC, which is impacted by the changes in SEC fee rates and the timing of collections from customers and payments to the SEC.

Net cash provided by operating activities increased $243 million for the year ended December 31, 2024 compared with the same period in 2023. The increase was primarily driven by an increase in net income and the impact of certain non-cash items on net income, primarily an increase in amortization expense due to acquired intangibles related to the Adenza acquisitions offset by a decrease in deferred income tax liabilities.

The changes in our operating assets and liabilities primarily included higher Section 31 fees payable to the SEC due to changes in Section 31 fee rate between periods, partially offset by higher cash outflows from accounts payable and accrued expenses, primarily due to interest paid relating to the senior unsecured notes and the settlement of a legal matter, and higher cash outflows from higher receivables, net, primarily due to higher Market Services receivables driven by higher Section 31 fee rate as well as higher billings.

Net Cash Used in Investing Activities

Net cash used in investing activities for the year ended December 31, 2024 related to net purchases of investments related to default funds and margin deposits of $707 million, purchases of property and equipment of $207 million, other investing activities primarily related to our corporate venture program of $32 million and net purchases of trading securities, net, of $7 million.

Net cash used in investing activities for the year ended December 31, 2023 related to $5,766 million paid for the acquisition of Adenza, net of cash and cash equivalents acquired, purchases of property and equipment of $158 million, net purchases of investments related to default funds and margin deposits of $74 million and $3 million from other investing activities, partially offset by proceeds from the sale and redemption of trading securities, net of $7 million.

Net Cash Provided by (Used in) Financing Activities

Net cash used in financing activities for the year ended December 31, 2024 primarily related to a decrease in default funds and margin deposits of $1,030 million, dividend payments to our shareholders of $541 million, 2023 Term Loan repayment of $340 million, net repayments of our commercial paper of $291 million, repayments of debt and credit commitments of $181 million and repurchases of common stock of $145 million.

Net cash provided by financing activities for the year ended December 31, 2023 primarily related to $5,608 million in proceeds from issuances of senior unsecured notes and the 2023 Term Loan, in connection with the Adenza acquisition, net of debt issuance costs partially offset by dividend payments to our shareholders of $441 million, repayments of our commercial paper, net of $371 million, repurchases of common stock of $269 million and partial repayment of the 2023 Term Loan of $260 million.

See Note 9, “Debt Obligations,” to the consolidated financial statements for further discussion of our debt obligations.

See “Share Repurchase Program,” and “Cash Dividends on Common Stock,” of Note 12, “Nasdaq Stockholders’ Equity,” to the consolidated financial statements for further discussion of our share repurchase program and cash dividends declared and paid on our common stock.

Financial Investments

Our financial investments totaled $184 million as of December 31, 2024 and $188 million as of December 31, 2023. Of these securities, $171 million as of December 31, 2024 and $168 million as of December 31, 2023 are assets primarily utilized to meet regulatory capital requirements, mainly for our clearing operations at Nasdaq Clearing. See Note 6, “Investments,” to the consolidated financial statements for further discussion.

Regulatory Capital Requirements

Clearing Operations Regulatory Capital Requirements

We are required to maintain minimum levels of regulatory capital for the clearing operations of Nasdaq Clearing. The level of regulatory capital required to be maintained is dependent upon many factors, including market conditions and creditworthiness of the counterparty. As of December 31, 2024, our required regulatory capital of $129 million was primarily comprised of highly rated European government debt securities that are included in financial investments in the Consolidated Balance Sheets.

Broker-Dealer Net Capital Requirements

Our broker-dealer subsidiaries, Nasdaq Execution Services, NFSTX, LLC, and Nasdaq Capital Markets Advisory, are subject to regulatory requirements intended to ensure their general financial soundness and liquidity. These requirements obligate these subsidiaries to comply with minimum net capital requirements. As of December 31, 2024, the combined required minimum net capital totaled $1 million and the combined excess capital totaled $24 million, substantially all of which is held in cash and cash equivalents in the Consolidated Balance Sheets. The required minimum net capital is included in restricted cash and cash equivalents in the Consolidated Balance Sheets.

Nordic and Baltic Exchange Regulatory Capital Requirements

The entities that operate trading venues in the Nordic and Baltic countries are each subject to local regulations and are required to maintain regulatory capital intended to ensure their general financial soundness and liquidity. As of December 31, 2024, our required regulatory capital of $35 million was primarily invested in European government bills and mortgage bonds that are included in financial investments in the Consolidated Balance Sheets and cash, which is included in restricted cash and cash equivalents in the Consolidated Balance Sheets.

Other Capital Requirements

We operate several other businesses which are subject to local regulation and are required to maintain certain levels of regulatory capital. As of December 31, 2024, other required regulatory capital of $12 million, primarily related to Nasdaq Central Securities Depository, was primarily invested in European government debt securities that are included in financial investments in the Consolidated Balance Sheets.

Equity and dividends

Share Repurchase Program

See “Share Repurchase Program,” of Note 12, “Nasdaq Stockholders’ Equity,” to the consolidated financial statements for further discussion of our share repurchase program.

Cash Dividends on Common Stock

The following table presents our quarterly cash dividends paid per common share on our outstanding common stock:

20242023
First quarter$0.22$0.20
Second quarter0.240.22
Third quarter0.240.22
Fourth quarter0.240.22
Total$0.94$0.86

See “Cash Dividends on Common Stock,” of Note 12, “Nasdaq Stockholders’ Equity,” to the consolidated financial statements for further discussion of the dividends.

Debt Obligations

The debt obligations, by contractual maturity, at December 31, 2024 are as follows (in U.S. Dollar millions):

n Euro Notes n U.S. Notes

549755833862

In the fourth quarter of 2024, we repurchased an aggregate amount of $181 million of outstanding notes, primarily related to the 2025 Notes, 2028 Notes and 2034 Notes. In February 2025, Nasdaq commenced a cash tender offer to repurchase up to an aggregate principal amount of $200 million of our 2028, 2034 and 2052 Notes.

For the year ended December 31, 2024, the weighted average interest rate on our debt obligations was approximately 3.95%. This rate can fluctuate based on changes in interest rates for our variable rate debts, changes in foreign currency exchange rates and changes in the amount and duration of outstanding debt. In addition to the 2022 Revolving Credit Facility, we also have other credit facilities primarily to support our Nasdaq Clearing operations in Europe, as well as to provide a cash pool credit line. These European credit facilities, which are available in multiple currencies, totaled $174 million as of December 31, 2024 and $191 million as of December 31, 2023 in available liquidity, none of which was utilized.

Financing of the Adenza Acquisition

In June 2023, Nasdaq issued six series of notes for total proceeds of $5,016 million, net of debt issuance costs of $38 million, with various maturity dates ranging from 2025 to 2063. The net proceeds from these notes were used to finance the majority of the cash consideration due in connection with the Adenza acquisition.

In addition, in connection with the financing of the Adenza acquisition, we entered into the 2023 Term Loan agreement. The 2023 Term Loan provided us with the ability to borrow up to $600 million to finance a portion of the cash consideration for the Adenza acquisition and other amounts incurred in connection with this transaction. On November 1, 2023, we borrowed $599 million, net of fees, under this term loan, which was used towards payment of the cash consideration due in connection with the Adenza acquisition, a portion of which had been repaid in the fourth quarter of 2023. The term loan was fully repaid in 2024.

As of December 31, 2024, we were in compliance with the covenants of all of our debt obligations.

See Note 9, “Debt Obligations,” to the consolidated financial statements for further discussion of our debt obligations.

CONTRACTUAL OBLIGATIONS AND CONTINGENT COMMITMENTS

Nasdaq has contractual obligations to make future payments under debt obligations by contract maturity, operating lease payments, and other obligations. The following table summarizes material cash requirements for known contractual and other obligations as of December 31, 2024, and the estimated timing thereof.

Payments Due by Period
(in millions)Total<1 year1-3 years3-5 years5+ years
Debt obligation by contractual maturity$15,252$761$1,171$2,148$11,172
Operating lease obligations61775140129273
Purchase obligations384961158984
Total$16,253$932$1,426$2,366$11,529

In the table above:

  • Debt obligations by contractual maturity include both principal and interest obligations. For our Euro denominated notes interest is calculated on an actual basis while all other debt obligations were primarily calculated on a 365-day basis at the contractual fixed rate multiplied by the aggregate principal amount as of December 31, 2024. See Note 9, “Debt Obligations,” to the consolidated financial statements for further discussion.

  • Operating lease obligations represent our undiscounted operating lease liabilities as of December 31, 2024, as well as legally binding minimum lease payments for leases signed but not yet commenced. See Note 16, “Leases,” to the consolidated financial statements for further discussion of our leases.

  • Purchase obligations primarily represent minimum outstanding obligations due under software license agreements. The balance as of December 31, 2024 is primarily comprised of our multi-year AWS partnership contract.

OFF-BALANCE SHEET ARRANGEMENTS

For discussion of off-balance sheet arrangements see:

  • Note 15, “Clearing Operations,” to the consolidated financial statements for further discussion of our non-cash default fund contributions and margin deposits received for clearing operations; and

  • Note 18, “Commitments, Contingencies and Guarantees,” to the consolidated financial statements for further discussion of:

◦Guarantees issued and credit facilities available;

◦Other guarantees; and

◦Routing brokerage activities.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a result of our operating, investing and financing activities, we are exposed to market risks such as interest rate risk and foreign currency exchange rate risk. We are also exposed to credit risk as a result of our normal business activities.

We have implemented policies and procedures to measure, manage, monitor and report risk exposures, which are reviewed regularly by management and the board of directors. We identify risk exposures and monitor and manage such risks on a daily basis.

We perform sensitivity analyses to determine the effects of market risk exposures. We may use derivative instruments solely to hedge financial risks related to our financial positions or risks that are incurred during the normal course of business. We do not use derivative instruments for speculative purposes.

Interest Rate Risk

We are subject to the risk of fluctuating interest rates in the normal course of business. Our exposure to market risk for changes in interest rates relates primarily to our financial investments and debt obligations, which are discussed below. Substantially all of our debt obligations are fixed-rate obligations. We may enter into transactions that expose us to interest rate risk, for which we may utilize interest rate swap agreements to manage that risk.

Financial Investments

As of December 31, 2024, our investment portfolio was primarily comprised of highly rated European government debt securities, which pay a fixed rate of interest. These securities are subject to interest rate risk and the fair value of these securities will decrease if market interest rates increase. The impact of an immediate increase to market interest rates, uniformly, by a hypothetical 100 basis points from levels as of December 31, 2024, would not have a material impact on our financial statements.

Debt Obligations

As of December 31, 2024, substantially all of our debt obligations are fixed-rate obligations. Interest rates on certain tranches of notes are subject to adjustment to the extent our debt rating is downgraded below investment grade, as further discussed in Note 9, “Debt Obligations,” to the consolidated financial statements. While changes in interest rates will have no impact on the interest we pay on fixed-rate obligations, we are exposed to changes in interest rates as a result of the borrowings under our 2022 Revolving Credit Facility, as this facility has a variable interest rate. 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, which have variable interest rates. As of December 31, 2024, there were no outstanding borrowings under our 2022 Revolving Credit Facility or commercial paper program.

Foreign Currency Exchange Rate Risk

We are subject to foreign currency exchange rate risk. Our primary transactional exposure to foreign currency denominated revenues less transaction-based expenses and operating income for the years ended December 31, 2024 and 2023 is presented in the following tables:

EuroSwedish KronaCanadian DollarOther Foreign CurrenciesU.S. Dollar
(in millions, except currency rate)
Year Ended December 31, 2024
Average foreign currency rate to the U.S. dollar1.0820.0950.730#N/A
Percentage of revenues less transaction-based expenses7.9%3.4%0.7%3.7%84.3%
Percentage of operating income11.8%(5.9)%(7.8)%(10.5)%112.4%
Impact of a 10% adverse currency fluctuation on revenues less transaction-based expenses$(37)$(16)$(3)$(17)$—
Impact of a 10% adverse currency fluctuation on operating income$(21)$(11)$(14)$(19)$—
EuroSwedish KronaCanadian DollarOther Foreign CurrenciesU.S. Dollar
(in millions, except currency rate)
Year Ended December 31, 2023
Average foreign currency rate to the U.S. dollar1.0810.0940.741#N/A
Percentage of revenues less transaction-based expenses6.6%4.0%0.8%3.0%85.6%
Percentage of operating income10.7%(3.8)%(7.0)%(8.3)%108.4%
Impact of a 10% adverse currency fluctuation on revenues less transaction-based expenses$(26)$(15)$(3)$(12)$—
Impact of a 10% adverse currency fluctuation on operating income$(17)$(6)$(11)$(13)$—

__________

Represents multiple foreign currency rates.

N/A Not applicable.

The adverse impacts shown in the preceding tables should be viewed individually by currency and not in aggregate due to the correlation between changes in exchange rates for certain currencies. Additionally, the table does not include the offsetting impact of our hedging programs.

We may use foreign exchange contracts to hedge a portion of our forecasted foreign currency denominated revenues and expenses in the normal course of business. We do not use these contracts for speculative trading purposes. We hedge these cash flow exposures to reduce the risk that our earnings and cash flows will be adversely affected by changes in exchange rates. These foreign exchange contracts are carried at fair value, with maturities that can range up to 24 months. We record changes in fair value of these cash flow hedges of foreign currency denominated revenue and expenses in accumulated other comprehensive loss in the Consolidated Balance Sheets, until the forecasted transaction occurs. When the forecasted transaction affects earnings, we reclassify the related gain or loss on the cash flow hedge to revenue or operating expenses, as applicable. In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, we reclassify the gain or loss on the related cash flow hedge from accumulated other comprehensive loss to revenue or operating expenses, as applicable. As of December 31, 2024, the fair value of our derivatives designated as cash flow hedging instruments are not material.

Our investments in foreign subsidiaries are exposed to volatility in currency exchange rates through translation of the foreign subsidiaries’ net assets or equity to U.S. dollars. Substantially all of our foreign subsidiaries operate in functional currencies other than the U.S. dollar. The financial statements of these subsidiaries are translated into U.S. dollars for consolidated reporting using a current rate of exchange, with net gains or losses recorded in accumulated other comprehensive loss in the Consolidated Balance Sheets.

Our primary exposure to net assets in foreign currencies as of December 31, 2024 is presented in the following table:

Net AssetsImpact of a 10% Adverse Currency Fluctuation
(in millions)
Swedish Krona$2,737$(274)
British Pound136(14)
Norwegian Krone134(13)
Canadian Dollar107(11)
Australian Dollar89(9)

In the table above, Swedish Krona includes goodwill of $2,028 million and intangible assets, net of $439 million.

Credit Risk

Credit risk is the potential loss due to the default or deterioration in credit quality of customers or counterparties. We are exposed to credit risk from third parties, including customers, counterparties and clearing agents. These parties may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons. We limit our

exposure to credit risk by evaluating the counterparties with which we make investments and execute agreements. For our investment portfolio, our objective is to invest in securities to preserve principal while maximizing yields, without significantly increasing risk. Credit risk associated with investments is minimized substantially by ensuring that these financial assets are placed with governments which have investment grade ratings, well-capitalized financial institutions and other creditworthy counterparties.

Our subsidiary, Nasdaq Execution Services, may be exposed to credit risk due to the default of trading counterparties in connection with the routing services it provides for our trading customers. System trades in cash equities routed to other market centers for members of our cash equity exchanges are routed by Nasdaq Execution Services for clearing to the NSCC. In this function, Nasdaq Execution Services is to be neutral by the end of the trading day, but may be exposed to intraday risk if a trade extends beyond the trading day and into the next day, thereby leaving Nasdaq Execution Services susceptible to counterparty risk in the period between accepting the trade and routing it to the clearinghouse. In this interim period, Nasdaq Execution Services is not novating like a clearing broker but instead is subject to the short-term risk of counterparty failure before the clearinghouse enters the transaction. Once the clearinghouse officially accepts the trade for novation, Nasdaq Execution Services is legally removed from trade execution risk. However, Nasdaq has membership obligations to NSCC independent of Nasdaq Execution Services’ arrangements.

Pursuant to the rules of the NSCC and Nasdaq Execution Services’ clearing agreement, Nasdaq Execution Services is liable for any losses incurred due to a counterparty or a clearing agent’s failure to satisfy its contractual obligations, either by making payment or delivering securities. Adverse movements in the prices of securities that are subject to these transactions can increase our credit risk. However, we believe that the risk of material loss is limited, as Nasdaq Execution Services’ customers are not permitted to trade on margin and NSCC rules limit counterparty risk on self-cleared transactions by establishing credit limits and capital deposit requirements for all brokers that clear with NSCC. Historically, Nasdaq Execution Services has never incurred a liability due to a customer’s failure to satisfy its contractual obligations as counterparty to a system trade. Credit difficulties or insolvency, or the perceived possibility of credit difficulties or insolvency, of one or more larger or visible market participants could also result in market-wide credit difficulties or other market disruptions.

We have credit risk related to transaction and subscription-based revenues that are billed to customers on a monthly or quarterly basis, in arrears. Our potential exposure to credit losses on these transactions is represented by the receivable balances in the Consolidated Balance Sheets. We review and evaluate changes in the status of our counterparties’ creditworthiness. Credit losses such as those described above could adversely affect our consolidated financial position and results of operations.

We also are exposed to credit risk through our clearing operations with Nasdaq Clearing. See Note 15, “Clearing Operations,” to the consolidated financial statements for further discussion. Our clearinghouse holds material amounts of clearing member cash deposits, which are held or invested primarily to provide security of capital while minimizing credit, market and liquidity risks. While we seek to achieve a reasonable rate of return, we are primarily concerned with preservation of capital and managing the risks associated with these deposits. As the clearinghouse may remit to the members interest earned at prevailing market rates, less a spread, this could include negative or reduced yield due to market conditions. The following is a summary of the risks associated with these deposits and how these risks are mitigated.

*•*Credit Risk: When the clearinghouse has the ability to hold cash collateral at a central bank, the clearinghouse utilizes its access to the central bank system to minimize credit risk exposures. When funds are not held at a central bank, we seek to substantially mitigate credit risk by ensuring that investments are primarily placed in large, highly rated financial institutions, highly rated government debt instruments and other creditworthy counterparties.

*•*Liquidity Risk: Liquidity risk is the risk a clearinghouse may not be able to meet its payment obligations in the right currency, in the right place and the right time. To mitigate this risk, the clearinghouse monitors liquidity requirements closely and maintains funds and assets in a manner which minimizes the risk of loss or delay in the access by the clearinghouse to such funds and assets. For example, holding funds with a central bank where possible or investing in highly liquid government debt instruments serves to reduce liquidity risks.

*•*Interest Rate Risk: Interest rate risk is the risk that interest rates rise causing the value of purchased securities to decline. If we were required to sell securities prior to maturity, and interest rates had risen, the sale of the securities might be made at a loss relative to the latest market price. Our clearinghouse seeks to manage this risk by making short term investments of members’ cash deposits. In addition, the clearinghouse investment guidelines allow for direct purchases or repurchase agreements with short dated maturities of high quality sovereign debt (for example, European government and U.S. Treasury securities), central bank certificates and multilateral development bank debt instruments.

*•*Security Issuer Risk: Security issuer risk is the risk that an issuer of a security defaults on its payment when the security matures. This risk is mitigated by limiting allowable investments and collateral under reverse repurchase agreements to high quality sovereign, government agency or multilateral development bank debt instruments.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make judgments, assumptions, and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. Note 2, “Summary of Significant Accounting Policies,” to the consolidated financial statements describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. The accounting policies described below are significantly affected by critical accounting estimates. Such accounting policies require significant judgments, assumptions, and estimates used in the preparation of the consolidated financial statements, and actual results could differ materially from the amounts reported based on these policies.

Revenue Recognition

As part of our market technology product offering, within our Capital Markets Technology business, we enter into certain 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 which results in these contracts containing 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.

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.

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. Revenue and cost estimates for our long-term contracts are reviewed and reassessed at least quarterly. 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.

Our Calypso product, also part of our Capital Markets Technology business, provides cross-asset, front-to-back trading, treasury, risk and collateral management solutions for the financial markets. This offering is also provided as an on-premises software solution. A license for on-premises software provides customers with the right to use the software at its current state at the time made available to the customer. These contracts generally consist of the following distinct performance obligations: license and PCS. In allocating the contractual price to each performance obligation, we have used our best estimate of the stand-alone selling price. Consideration is first allocated to performance obligations with established stand-alone selling prices based on observable evidence, with the residual being split between license and PCS.

License revenue is recognized upfront at the point in time when the software is made available to the customer as this is the point the user of the software can direct the use of and obtain substantially all of the remaining benefits from the software license. PCS revenue is 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.

Accounting for these contracts requires judgment relative to the allocation of the contractual price to each performance obligation.

Due to the significance of judgment in the estimation process, as discussed above, changes in assumptions and estimates may adversely or positively affect financial performance in future periods.

For further discussion related to recognition of these revenues, see “Revenue From Contracts with Customers - Revenue Recognition - Capital Markets Technology,” of Note 2, “Summary of Significant Accounting Policies,” to the consolidated financial statements.

Business Combination

We account for business acquisitions under the acquisition method of accounting. The assets acquired and liabilities assumed in connection with business acquisitions are recorded at the date of acquisition at their estimated fair values, with any excess of the purchase price over the estimated fair values of the net assets acquired recorded as goodwill. Within one year from the date of acquisition, we may update the value allocated to the assets acquired and

liabilities assumed, and the resulting goodwill balance, based on information received regarding the valuation of such assets and liabilities that was not available at the time of purchase.

We use various methods to determine fair value depending on the type of assets acquired and liabilities assumed. We make estimates and assumptions about projected future cash flows including, but not limited to, forecasted revenue, cash flows, attrition rates, long term growth rates, royalty rates, EBITDA margin and discount rates.

Significant judgment is required in estimating the fair value of assets acquired and liabilities assumed and in assigning useful lives to certain definite-lived intangible and tangible assets. Accordingly, we may engage third-party valuation specialists to assist in these determinations. The fair value estimates are based on available information as of the acquisition date and assumptions deemed reasonable by management but are inherently uncertain.

In the third quarter of 2024 we recorded a purchase accounting adjustment to the estimated purchase price allocation shown above, and disclosed as of December 31, 2023. This adjustment relates to the impact of the change from upfront to ratable revenue recognition for AxiomSL on-premises contracts entered into prior to the acquisition date, as described above, and decreased accrued income (which reflects revenue earned but not yet billed and included in receivables above) by $46 million, increased deferred revenue by $56 million and increased goodwill by $77 million, net of a deferred tax asset of $25 million. During 2023 and 2022, we have not recorded any material measurement period adjustments to purchase price allocations.

See Note 4, “Acquisition,” to the consolidated financial statements for further discussion of the Adenza Acquisition.

Goodwill, Indefinite-Lived Intangible Assets and Related Impairment Testing

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. We perform our goodwill impairment test at the reporting unit level for our three reporting units: Capital

Access Platforms, Financial Technology and Market Services segments.

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. Our decision to perform a qualitative impairment assessment in a given year is influenced by a number of factors, including but not limited to, the size of the reporting unit’s goodwill, the significance of the excess of the reporting unit’s estimated fair value or the indefinite-lived intangible asset’s fair value over their respective carrying amounts at the last quantitative assessment date, and the amount of time in between quantitative fair value assessments.

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. The fair value of each reporting unit is estimated using a combination of a discounted cash flow valuation, which incorporates assumptions regarding future growth rates, terminal values, and discount rates, as well as guideline public company valuations, which incorporates relevant trading multiples of comparable companies and other factors. The estimates and assumptions used consider historical performance and are consistent with the assumptions used in determining future profit plans for each reporting unit, which are approved by our board of directors. The fair value of indefinite-lived intangible assets is primarily determined on the basis of estimated discounted value, using the Greenfield Approach for exchange and clearing registrations and licenses, and the relief from royalty approach or excess earnings approach for trade names, both of which incorporate assumptions regarding future revenue projections and discount rates. 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.

The following table presents the carrying value of goodwill for our reportable segments at the time of our 2024 annual impairment test:

October 1, 2024
(in millions)
Capital Access Platforms$4,210
Financial Technology7,945
Market Services2,010
$14,165

In 2024, we performed a qualitative impairment test for goodwill on all reporting units and indefinite-lived intangible assets, as the excesses of their fair values over their respective carrying amounts, at the time of the last quantitative test in 2023, were significant. In conducting the qualitative assessment, we evaluated the performance of each of these reporting units and indefinite-lived intangible assets since the last quantitative test, as well as future financial projections to determine if there were any changes in the key inputs used to determine their respective fair values. We also considered the qualitative factors in FASB ASC Topic 350, “Intangibles–Goodwill and Other,” as well as other relevant events and circumstances. Based on the results of the qualitative assessment for each reporting unit and indefinite-lived intangible asset, and the predominance of positive indicators and the weight of such indicators, we concluded that the fair values of our reporting units and indefinite-lived intangible assets are more likely than not greater than their respective carrying amounts and as a result, quantitative analyses were not needed. No impairment of goodwill or indefinite-lived intangible assets was recorded in 2024, 2023 and 2022.

Although we believe our estimates of fair value are reasonable, the determination of certain valuation inputs is subject to management’s judgment. Changes in these inputs could materially affect the results of our impairment review. If our forecasts of cash flows or other key inputs are negatively revised in the future, the estimated fair value of each reporting unit and of our indefinite-lived intangible assets would be adversely impacted, potentially leading to an impairment in the future that could materially affect our operating results.

Subsequent to our annual impairment test, no indications of impairment were identified.

Other Long-Lived Assets and Related Impairment

We review our other long-lived assets, such as finite-lived intangible assets, property and equipment, and operating lease assets 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 intangible assets impairment charges in 2024, 2023 and 2022.

We recorded pre-tax, non-cash property and equipment asset impairment charges, primarily in relation to our restructuring programs of $37 million in 2024, $12 million in 2023 and $8 million in 2022. See Note 20, “Restructuring Charges,” to the consolidated financial statements for a discussion of these plans.

In 2023, we initiated a review of our real estate and facility capacity requirements due to our new and evolving work models. As a result of this ongoing review, we recorded impairment charges of $23 million in 2023 of which $18 million related to operating lease asset impairment and exit costs and is included in occupancy expense in the Consolidated Statements of Income and $5 million related to impairment of leasehold improvements, which are recorded in depreciation and amortization expense in the Consolidated Statements of Income.

No material impairments were recorded to reduce the carrying value of our other long-lived assets during 2024, 2023 or 2022.

Income Taxes

Estimates and judgments are required in the calculation of certain tax liabilities and in the determination of the recoverability of certain deferred tax assets, which arise from net operating loss carryforwards, tax credit carryforwards and temporary differences between the tax and financial statement recognition of revenues and expenses. Our deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. Management is required to determine 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.

In assessing the need for a valuation allowance, we consider all available evidence including past operating results, the existence of cumulative losses in the most recent fiscal years, estimates of future taxable income and the feasibility of tax planning strategies. In the event that we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.

In addition, the calculation of our tax liabilities involves uncertainties in the application of tax regulations in the U.S. and other tax jurisdictions. We recognize potential liabilities for anticipated tax audit issues in such jurisdictions based on our estimate of whether, and the extent to which, additional taxes and interest may be due. While we believe that our tax liabilities reflect the probable outcome of identified tax uncertainties, it is reasonably possible that the ultimate resolution of any tax matter may be greater or less than the

amount accrued. If events occur and the payment of these amounts ultimately proves unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when we determine the liabilities are no longer necessary. If our estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result.

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