Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the financial condition and results of operations of Nasdaq should be read in conjunction with our condensed consolidated financial statements and related notes included in this Form 10-Q.

OVERVIEW

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

Our organizational structure aligns our businesses with the foundational shifts that are driving the evolution of the global financial system. In order to amplify our strategy, we aligned the Company more closely with evolving client needs into Capital Access Platforms, Financial Technology and Market Services reportable segments. All prior periods have been restated to conform to the current period presentation. See Note 18, “Business Segments,” to the condensed consolidated financial statements for further discussion of our reportable segments and geographic data, as well as how management allocates resources, assesses performance and manages these businesses as three separate segments.

First Quarter 2024 and Recent Developments

ETP AUM linked to Nasdaq indices reached record levels, ending the first quarter at $519 billion.
Nasdaq maintained its leadership among exchanges in U.S. multi-listed options. In the first quarter of 2024, Nasdaq led all exchanges during the period in total volume traded for U.S. multi-listed equity options. Nasdaq also achieved record revenue in its proprietary index options franchise, driven by record trading volumes.
In April 2024, the board of directors approved a regular quarterly cash dividend of $0.24 per share on our outstanding common stock, which reflects an increase of 9% from our most recent quarterly cash dividend of $0.22 per share.
For the three months ended March 31, 2024, we returned $127 million to shareholders through dividend payments.

Nasdaq’s Operating Results

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


	Three Months Ended March 31,				Percentage Change
	2024		2023
	(in millions, except per share amounts)
Revenues less transaction-based expenses	$	1,117	$	914	22.2	%
Operating expenses	707		502		40.8	%
Operating income	$	410	$	412	(0.5)	%
Net income attributable to Nasdaq	$	234	$	302	(22.5)	%
Diluted earnings per share	$	0.40	$	0.61	(34.4)	%
Cash dividends declared per common share	$	0.22	$	0.20	10.0	%

In countries with currencies other than the U.S. dollar, revenues and expenses are translated using monthly average exchange rates. Impacts on our revenues less transaction-based expenses and operating income associated with fluctuations in foreign currency are discussed in more detail under “Item 3. Quantitative and Qualitative Disclosures about Market Risk.”

The following chart summarizes our ARR (in millions):

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

The ARR chart includes:


▪						Proprietary market data subscriptions and annual listing fees within our Data & Listing Services business, index data subscriptions and guaranteed minimum on futures contracts within our Index business and subscription contracts under our Workflow & Insights business.
▪						SaaS subscription and support contracts related to Verafin, surveillance, market technology, AxiomSL, Calypso and trade management services, excluding one-time service requests.

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

1635

Segment Operating Results

The following table presents our revenues by segment:


	Three Months Ended March 31,				Percentage Change
	2024		2023
	(in millions)
Capital Access Platforms	$	479	$	415	15.4	%
Financial Technology	392		229		71.2	%
Market Services	794		879		(9.7)	%
Other revenues	9		10		(10.0)	%
Total revenues	$	1,674	$	1,533	9.2	%
Transaction rebates	(481)		(487)		(1.2)	%
Brokerage, clearance and exchange fees	(76)		(132)		(42.4)	%
Total revenues less transaction-based expenses	$	1,117	$	914	22.2	%

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. 267

CAPITAL ACCESS PLATFORMS

The following table presents revenues from our Capital Access Platforms segment:


	Three Months Ended March 31,				Percentage Change
	2024		2023
	(in millions)
Data & Listing Services	$	186	$	185	0.5	%
Index	168		110		52.7	%
Workflow & Insights	125		120		4.2	%
Total Capital Access Platforms	$	479	$	415	15.4	%

Data & Listing Services Revenues

The following table presents key drivers from our Data & Listing Services business:


	Three Months Ended March 31,
	2024		2023
IPOs
The Nasdaq Stock Market	27		40
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic	1		2
Total new listings
The Nasdaq Stock Market	79		81
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic	2		7
Number of listed companies
The Nasdaq Stock Market	4,020		4,163
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic	1,203		1,250













	As of March 31,
	2024		2023
ARR (in millions)	$	665	$	673

In the table above:

Number of total listed companies on The Nasdaq Stock Market for the three months ended March 31, 2024 and 2023 included 619 and 539 ETPs, respectively. For the three months ended March 31, 2024 and 2023, IPOs included 5 and 10 SPACs, 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 the first quarter of 2024 compared with the same period in 2023 due to new listings and an increase in proprietary data revenues due to our international expansion, partially offset by the impact of 2023 delistings.

Index Revenues

The following table presents key drivers from our Index business:


	As of or Three Months Ended March 31,
	2024		2023
Number of licensed ETPs	361		387
TTM change in period end ETP AUM tracking Nasdaq indices (in billions)
Beginning balance	$	366	$	401
Net appreciation (depreciation)	124		(57)
Net impact of ETP sponsor switches	(17)		(1)
Net inflows	46		23
Ending balance	$	519	$	366
Quarterly average ETP AUM tracking Nasdaq indices (in billions)	$	492	$	341

ARR (in millions)	$	74	$	71

In the table above, TTM represents trailing twelve months.

Index revenues increased in the first quarter of 2024 compared with the same period in 2023 primarily due to higher AUM in exchange traded products linked to Nasdaq indices, strong futures capture and trading volume of contracts linked to the Nasdaq-100 Index and a $16 million one-time item related to a legal settlement to recoup revenue.

Workflow & Insights Revenues

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


	As of or Three Months Ended March 31
	2024		2023
	(in millions)
ARR	$	481	$	458
Quarterly annualized SaaS revenues	411		386

Workflow & Insights revenues increased in the first quarter of 2024 compared with the same period in 2023 primarily due to an increase in analytics revenues. The increase was primarily due to higher Data Link sales and growth in our eVestment product offerings.

FINANCIAL TECHNOLOGY

The following table presents revenues from our Financial Technology segment:




















	Three Months Ended March 31,				Percentage Change
	2024		2023
	(in millions)
Financial Crime Management Technology	$	64	$	52	23.1	%
Regulatory Technology	90		32		181.3	%
Capital Markets Technology	238		145		64.1	%
Total Financial Technology	$	392	$	229	71.2	%

Financial Crime Management Technology Revenues

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


	As of or Three Months Ended March 31
	2024		2023
	(in millions)
ARR and Quarterly annualized SaaS revenues	$	243	$	196

Financial Crime Management Technology revenues increased in the first quarter of 2024 compared to the same period in 2023 primarily due to an increase in demand related to new sales to existing clients and new customer acquisitions, particularly small and medium-sized businesses.

Regulatory Technology Revenues

The following table presents key drivers for Regulatory Technology business:


	As of or Three Months Ended March 31
	2024		2023
	(in millions)
ARR	$	328	$	125
Quarterly annualized SaaS revenues	168		110

Regulatory Technology revenues increased in the first quarter of 2024 compared to the same period in 2023 primarily due to the inclusion of revenues from AxiomSL due to our acquisition of Adenza.

Capital Markets Technology Revenues

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


	As of or Three Months Ended March 31
	2024		2023
	(in millions)
ARR	$	821	$	506
Quarterly annualized SaaS revenues	110		37

Capital Markets Technology revenues increased in the first quarter of 2024 compared with the same period in 2023. The increase was primarily due to the inclusion of revenues from Calypso due to our acquisition of Adenza and higher trade management services revenues mainly driven by demand for colocation and connectivity services and pricing, partially offset by lower market technology revenues related to lower professional fees.

MARKET SERVICES

The following table presents revenues from our Market Services segment:


	Three Months Ended March 31,				Percentage Change
	2024		2023
	(in millions)
Market Services	$	794	$	879	(9.7)	%
Transaction-based expenses:
Transaction rebates	(481)		(487)		(1.2)	%
Brokerage, clearance and exchange fees	(76)		(132)		(42.4)	%
Total Market Services, net	$	237	$	260	(8.8)	%

Our Market Services segment includes equity derivatives trading, cash equity trading, Nordic fixed income trading & clearing, U.S. Tape plans and other revenues. The following table presents net revenues by product from our Market Services segment:


	Three Months Ended March 31,				Percentage Change
	2024		2023
	(in millions)
U.S. Equity Derivative Trading	$	91	$	102	(10.8)	%
Cash Equity Trading	100		103		(2.9)	%
U.S. Tape plans	28		36		(22.2)	%
Other	18		19		(5.3)	%
Total Market Services, net	$	237	$	260	(8.8)	%

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

U.S. Equity Derivative Trading

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


	Three Months Ended March 31,				Percentage Change
	2024		2023
	(in millions)
U.S. Equity Derivative Trading Revenues	$	323	$	327	(1.2)	%
Section 31 fees	11		23		(52.2)	%
Transaction-based expenses:
Transaction rebates	(231)		(224)		3.1	%
Section 31 fees	(11)		(23)		(52.2)	%
Brokerage and clearance fees	(1)		(1)		—	%
U.S. Equity derivative trading revenues, net	$	91	$	102	(10.8)	%

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 decreased in the first quarter of 2024 compared with the same period in 2023 primarily due to lower average SEC fee rates. Since the amount recorded in revenues is equal to the amount recorded as Section 31 fees, there is no impact on our net revenues.


	Three Months Ended March 31,
	2024		2023
U.S. equity options
Total industry average daily volume (in millions)	43.3		42.4
Nasdaq PHLX matched market share	10.3	%	11.1	%
The Nasdaq Options Market matched market share	5.4	%	7.1	%
Nasdaq BX Options matched market share	2.2	%	3.3	%
Nasdaq ISE Options matched market share	6.3	%	5.8	%
Nasdaq GEMX Options matched market share	2.5	%	2.0	%
Nasdaq MRX Options matched market share	2.5	%	1.5	%
Total matched market share executed on Nasdaq’s exchanges	29.2	%	30.8	%

U.S. equity derivative trading revenues and U.S. equity derivative trading revenues less transaction-based expenses decreased in the first quarter of 2024 compared with the same period in 2023. The decrease in U.S. equity derivative trading revenues was primarily due to lower overall matched market share executed on Nasdaq’s exchanges, partially offset by a higher gross capture rate and higher industry volumes. The decrease in U.S. equity derivative trading revenues less transaction-based expenses was primarily due to lower capture and lower overall matched market share executed on Nasdaq’s exchanges, partially offset by higher industry volumes.

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

Cash Equity Trading Revenues

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


	Three Months Ended March 31,				Percentage Change
	2024		2023
	(in millions)
Cash Equity Trading Revenues	$	350	$	366	(4.4)	%
Section 31 fees	59		102		(42.2)	%
Transaction-based expenses:
Transaction rebates	(245)		(257)		(4.7)	%
Section 31 fees	(59)		(102)		(42.2)	%
Brokerage and clearance fees	(5)		(6)		(16.7)	%
Cash equity trading revenues, net	$	100	$	103	(2.9)	%

See the discussion in "U.S. Equity Derivative Trading" for an explanation of Section 31 fees for the first quarter of 2024 as compared with the same period in 2023. Since the amount recorded in revenues is equal to the amount recorded as Section 31 fees, there is no impact on our net revenues.


	Three Months Ended March 31,
	2024			2023
Total U.S.-listed securities
Total industry average daily share volume (in billions)	11.8			11.8
Matched share volume (in billions)	116.7			121.8
The Nasdaq Stock Market matched market share	15.7		%	15.8		%
Nasdaq BX matched market share	0.4		%	0.4		%
Nasdaq PSX matched market share	0.2		%	0.5		%
Total matched market share executed on Nasdaq’s exchanges	16.3		%	16.7		%
Market share reported to the FINRA/Nasdaq Trade Reporting Facility	41.4		%	31.6		%
Total market share	57.7		%	48.3		%
Nasdaq Nordic and Nasdaq Baltic securities
Average daily number of equity trades executed on Nasdaq’s exchanges	666,408			787,715
Total average daily value of shares traded (in billions)	$	4.7		$	5.3
Total market share executed on Nasdaq’s exchanges	71.7		%	68.9		%

In the table above, total market share includes transactions executed on The Nasdaq Stock Market’s, Nasdaq BX’s and Nasdaq PSX’s systems plus trades reported through the FINRA/Nasdaq Trade Reporting Facility.

Cash equity trading revenues and cash equity trading revenues less transaction-based expenses decreased in the first quarter of 2024 compared with the same period in 2023 primarily due to lower overall U.S. matched market share executed on Nasdaq’s exchanges.

Transaction rebates decreased in the first quarter of 2024 compared with the same period in 2023. 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. The decrease was primarily due to lower U.S. matched market share executed on Nasdaq's exchanges.

U.S. Tape Plans

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


	Three Months Ended March 31,				Percentage Change
	2024		2023
	(in millions)
U.S. Tape plans	$	28	$	36	(22.2)	%

U.S. Tape plans revenues decreased in the first quarter of 2024 compared with the same period in 2023 primarily due to lower industry-wide usage volume as well as 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 table presents revenue and a key driver from our Other business:


	Three Months Ended March 31,				Percentage Change
	2024		2023
	(in millions)
Other	$	18	$	19	(5.3)	%

In the table above, other includes transaction rebates of $5 million and $6 million for the three months ended March 31, 2024 and 2023, respectively.


	Three Months Ended March 31,
	2024	2023
Nasdaq Nordic and Nasdaq Baltic options and futures
Total average daily volume of options and futures contracts	241,665	344,141

In the table above, Nasdaq Nordic and Nasdaq Baltic total average daily volume of options and futures contracts include Finnish option contracts traded on Eurex for which Nasdaq and Eurex have a revenue sharing arrangement. The revenue sharing arrangement ended in the fourth quarter of 2023.

Other revenues decreased in the first quarter of 2024 compared with the same period in 2023 primarily due to lower European equity derivatives trading volumes.

OTHER REVENUES

For the three months ended March 31, 2024 and 2023, other revenues include revenues related to our European power trading and clearing business, following our announcement in June 2023 to sell this business to the European Energy Exchange, subject to regulatory approval. Prior to June 2023, these revenues were included in our Market Services and Capital Access Platforms segments.

EXPENSES

Operating Expenses

The following table presents our operating expenses:


	Three Months Ended March 31,				Percentage Change
	2024		2023
	(in millions)
Compensation and benefits	$	340	$	256	32.8	%
Professional and contract services	34		32		6.3	%
Computer operations and data communications	67		54		24.1	%
Occupancy	28		39		(28.2)	%
General, administrative and other	28		14		100.0	%
Marketing and advertising	11		9		22.2	%
Depreciation and amortization	155		69		124.6	%
Regulatory	9		9		—	%
Merger and strategic initiatives	9		2		350.0	%
Restructuring charges	26		18		44.4	%
Total operating expenses	$	707	$	502	40.8	%

The increase in compensation and benefits expense for the first quarter of 2024 compared with the same period in 2023 was primarily driven by increased headcount as well as a pre-tax loss of $23 million resulting from the finalization of the termination of our pension plan.

Headcount, including employees of non-wholly owned consolidated subsidiaries, increased to 8,568 employees as of March 31, 2024 from 6,486 as of March 31, 2023, primarily due to our acquisition of Adenza.

Professional and contract services expense remained relatively flat in the first quarter of 2024 compared with the same period in 2023.

Computer operations and data communications expense increased in the first quarter of 2024 compared with the same period in 2023 primarily due to an increase in expenses related to the inclusion of Adenza in the first quarter of 2024 and increased investment in technology, primarily higher costs related to our cloud initiatives and software.

Occupancy expense decreased in the first quarter of 2024 compared with the same period in 2023 primarily due to $12 million in impairment charges and exit related costs recorded in the first quarter of 2023 following the abandonment of leased office space.

General, administrative and other expense increased in the first quarter of 2024 compared with the same period in 2023 primarily due to an insurance recovery related to a legal matter in the first quarter of 2023 and increased expenses related to the inclusion of Adenza in the first quarter of 2024.

Marketing and advertising expense remained relatively flat in the first quarter of 2024 compared with the same period in 2023.

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

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. The increase for the three months ended March 31, 2024 compared with the same period in 2023 primarily reflects higher expenses related to the Adenza acquisition.

Restructuring charges increased in the first quarter of 2024 compared with the same period in 2023 as a result of charges from our Adenza restructuring program. See Note 19, “Restructuring Charges,” to the condensed consolidated financial statements for further discussion. By 2025, we expect to achieve benefits of the 2022 divisional alignment program through combined annual run-rate operating efficiencies and revenue synergies of approximately $30 million annually. We expect to achieve $80 million of net expense synergies two years following the closing of the Adenza acquisition.

Non-operating Income and Expenses

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


	Three Months Ended March 31,				Percentage Change
	2024		2023
	(in millions)
Interest income	$	6	$	6	—%
Interest expense	(108)		(36)		200.0	%
Net interest expense	(102)		(30)		240.0	%

Other income	1		—		N/M
Net income from unconsolidated investees	3		14		(78.6)	%
Total non-operating expense	$	(98)	$	(16)	512.5	%

N/M - Not meaningful

The following table presents our interest expense:


	Three Months Ended March 31,				Percentage Change
	2024		2023
	(in millions)
Interest expense on debt	$	103	$	35	194.3	%
Accretion of debt issuance costs and debt discount	4		1		300.0	%
Other fees	1		—		N/M
Interest expense	$	108	$	36	200.0	%

N/M - Not meaningful

Interest income remained flat in the first quarter of 2024 compared with the same period in 2023.

Interest expense increased in the first quarter of 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 8, “Debt Obligations,” to the condensed consolidated financial statements for further discussion.

Net income from unconsolidated investees decreased in the first quarter of 2024 compared with the same period in 2023 primarily due to lower income recognized from our equity method investment in OCC. See “Equity Method Investments,” of Note 6, “Investments,” to the condensed consolidated financial statements for further discussion.

Tax Matters

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


	Three Months Ended March 31,						Percentage Change
	2024			2023
	($ in millions)
Income tax provision	$	79		$	95		(16.8)	%
Effective tax rate	25.3		%	24.0		%

For further discussion of our tax matters, see Note 16, “Income Taxes,” to the condensed consolidated financial statements.

NON-GAAP FINANCIAL MEASURES

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

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

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

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

Merger and strategic initiatives expense: We have pursued various strategic initiatives and completed acquisitions and divestitures in recent years that have resulted in expenses which would not have otherwise been incurred. The frequency and the amount of such expenses vary significantly based on the size, timing and complexity of the transaction. These expenses primarily include integration costs, as well as legal, due diligence and other third-party transaction costs. The increase in the first quarter of 2024 compared with the same period in 2023 primarily reflects costs related to the Adenza acquisition.
Restructuring charges: In the fourth quarter of 2023, following the closing of the Adenza acquisition, our management approved, committed to and initiated a restructuring program, “Adenza Restructuring” to optimize our efficiencies as a combined organization. In October 2022, following our September 2022 announcement to realign our segments and leadership, we initiated a divisional alignment program with a focus on realizing the full potential of this structure. See Note 19, “Restructuring Charges,” to the condensed consolidated financial statements for further discussion of our Adenza restructuring program and our divisional alignment program.
Net income from unconsolidated investees: We exclude our share of the earnings and losses of our equity method investments, primarily our equity interest in OCC. This provides a more meaningful analysis of Nasdaq’s ongoing operating performance or comparisons in Nasdaq’s performance between periods. See “Equity Method Investments,” of Note 6, “Investments,” to the condensed consolidated financial statements for further discussion.
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 first quarter of 2023, this included impairment charges related to our operating lease assets and leasehold improvements associated with vacating certain leased office space, which are recorded in occupancy and depreciation and amortization expense in our Condensed Consolidated Statements of Income.

**◦**Legal and regulatory matters: For the first quarter of 2023, this primarily included insurance recoveries related to certain legal matters. The insurance recoveries are recorded in professional and contract services and general, administrative and other expense in the Condensed Consolidated Statements of Income.

**◦**Pension settlement charge: In the first quarter of 2024, we recorded a pre-tax loss as a result of settling our U.S. pension plan. The plan was terminated and partially settled in 2023, with final settlement occurring during the first quarter of 2024. The loss is recorded in compensation and benefits in the Condensed Consolidated Statements of Income. See Note 9, “Retirement Plans,” to the condensed consolidated financial statements for further discussion.

*•*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.

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:


	Three Months Ended March 31,
	2024			2023
	(in millions, except per share amounts)
U.S. GAAP net income attributable to Nasdaq	$	234		$	302
Non-GAAP adjustments:
Amortization expense of acquired intangible assets	123			38
Merger and strategic initiatives expense	9			2
Restructuring charges	26			18
Lease asset impairments	—			17

Net income from unconsolidated investees	(3)			(14)
Legal and regulatory matters	2			(10)


Pension settlement charge	23			—

Other	—			1
Total non-GAAP adjustments	$	180		$	52
Total non-GAAP tax adjustments	(47)			(15)
Total non-GAAP adjustments, net of tax	$	133		$	37
Non-GAAP net income attributable to Nasdaq	$	367		$	339

U.S. GAAP effective tax rate	25.3		%	24.0		%
Total adjustments from non-GAAP tax rate	0.3		%	0.6		%
Non-GAAP effective tax rate	25.6		%	24.6		%

Weighted-average common shares outstanding for diluted earnings per share	578.9			494.8

U.S. GAAP diluted earnings per share	$	0.40		$	0.61
Total adjustments from non-GAAP net income	0.23			0.08
Non-GAAP diluted earnings per share	$	0.63		$	0.69

LIQUIDITY AND CAPITAL RESOURCES

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

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

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

deterioration of our revenues in any of our business segments;
changes in regulatory and working capital requirements; and
an increase in our expenses.

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

operating covenants contained in our credit facilities that limit our total borrowing capacity;
credit rating downgrades, which could limit our access to additional debt;
a significant decrease in the market price of our common stock; and
volatility or disruption in the public debt and equity markets.

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


	March 31, 2024		December 31, 2023
	(in millions)
Cash and cash equivalents	$	388	$	453

Financial investments	173		188
Working capital	(72)		71

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 March 31, 2024, our cash and cash equivalents of $388 million were primarily invested in money market funds, commercial paper, municipal bonds and bank deposits.

Repatriation of Cash

Our cash and cash equivalents held outside of the U.S. in various foreign subsidiaries totaled $206 million as of March 31, 2024 and $236 million as of December 31, 2023. The remaining balance held in the U.S. totaled $182 million as of March 31, 2024 and $217 million as of December 31, 2023.

Cash Flow Analysis

The following table summarizes the changes in cash flows:


	Three Months Ended March 31,
	2024		2023
Net cash provided by (used in):	(in millions)
Operating activities	$	530	$	565
Investing activities	(232)		(133)
Financing activities	(1,875)		(613)
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents	(311)		29
Net decrease in cash and cash equivalents and restricted cash and cash equivalents	$	(1,888)	$	(152)
Cash and cash equivalents, restricted cash and cash equivalents at beginning of period	7,118		6,994
Cash and cash equivalents, restricted cash and cash equivalents at end of period	$	5,230	$	6,842
Reconciliation of Cash, Cash Equivalents and Restricted Cash and Cash Equivalents
Cash and cash equivalents	$	388	$	373
Restricted cash and cash equivalents	21		57
Restricted cash and cash equivalents (default funds and margin deposits)	4,821		6,412
Total	$	5,230	$	6,842

Net Cash Provided by Operating Activities

Net cash provided by operating activities primarily consists of net income adjusted for certain non-cash items, including depreciation and amortization expense, expense associated with share-based compensation, deferred income taxes and the effects of changes in working capital. Changes in working capital include changes in accounts receivable and deferred revenue which are impacted by the timing of customer billings and related collections from our customers; accounts payable and accrued expenses due to timing of payments; accrued personnel costs, which are impacted by employee performance targets and the timing of payments related to employee bonus incentives; and Section 31 fees payable to the SEC, which is impacted by the changes in SEC fee rates and the timing of collections from customers and payments to the SEC.

Net cash provided by operating activities decreased $35 million for the first quarter of 2024 compared with the same period in 2023. The decrease was primarily driven by changes in our operating assets and liabilities and timing of various payments and receipts of $(53) million, partially offset by an increase of $18 million driven by the increase in net income adjusted for certain noncash operating activities. The changes in our operating assets and liabilities primarily included higher cash outflows in accounts payable and accrued expenses, primarily due to an increase in our accrued interest and interest paid relating to the senior unsecured notes issued in June 2023 in connection with the Adenza acquisition, as well as various other increased cash outflows impacting our working capital. This was partially offset by lower cash outflows from Section 31 fees payable primarily due to a lower Section 31 fee paid in the first quarter of 2024 as compared with the same period in 2023. Non-cash charges in the first quarter of 2024 primarily included $155 million of depreciation and amortization and $30 million of share-based compensation.

Net Cash Used in Investing Activities

Net cash used in investing activities for the three months ended March 31, 2024 primarily related to net purchases of investments related to default funds and margin deposits of $184 million, purchases of property and equipment of $39 million and $13 million from other investing activities, partially offset by proceeds from the sales and redemptions of trading securities, net, of $4 million.

Net cash used in investing activities for the three months ended March 31, 2023 primarily related to net purchases of investments related to default funds and margin deposits of $89 million, purchases of property and equipment of $40 million and net purchases of trading securities of $14 million, partially offset by proceeds of $10 million from other investing activities.

Net Cash Used in Financing Activities

Net cash used in financing activities for the three months ended March 31, 2024 primarily related to a decrease related to our default funds and margin deposits of $1,317 million, $340 million relating to repayment of the 2023 Term Loan, $127 million of dividend payments to our shareholders, $67 million from repayments of our commercial paper, net and $24 million of payments related to employee shares withheld for taxes.

Net cash used in financing activities for the three months ended March 31, 2023 primarily related to $317 million from repayments of our commercial paper, net, $159 million in repurchases of common stock, $98 million of dividend payments to our shareholders and $40 million of payments related to employee shares withheld for taxes.

See Note 8, “Debt Obligations,” to the condensed consolidated financial statements for further discussion of our debt obligations.

See “Share Repurchase Program,” and “Cash Dividends on Common Stock,” of Note 11, “Nasdaq Stockholders’ Equity,” to the condensed consolidated financial statements for further discussion of our share repurchase program and cash dividends declared and paid on our common stock.

Financial Investments

Our financial investments totaled $173 million as of March 31, 2024 and $188 million as of December 31, 2023. Of these securities, $160 million as of March 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 condensed 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 March 31, 2024, our required regulatory capital of $120 million was primarily comprised of highly rated European government debt securities that are included in financial investments in the Condensed Consolidated Balance Sheets.

Broker-Dealer Net Capital Requirements

Our broker-dealer subsidiaries, Nasdaq Execution Services, NFSTX, LLC, and Nasdaq Capital Markets Advisory, are subject to regulatory requirements intended to ensure their general financial soundness and liquidity. These requirements obligate these subsidiaries to comply with minimum net capital requirements. As of March 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 Condensed Consolidated Balance Sheets. The required minimum net capital is included in restricted cash and cash equivalents in the Condensed Consolidated Balance Sheets.

Nordic and Baltic Exchange Regulatory Capital Requirements

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

Other Capital Requirements

We operate several other businesses which are subject to local regulation and are required to maintain certain levels of regulatory capital. As of March 31, 2024, other required regulatory capital of $16 million, primarily related to Nasdaq Central Securities Depository, was primarily invested in European government debt securities that are included in financial investments in the Condensed Consolidated Balance Sheets.

Equity and dividends

Share Repurchase Program

See “Share Repurchase Program,” of Note 11, “Nasdaq Stockholders’ Equity,” to the condensed consolidated financial statements for further discussion of our share repurchase program.

Cash Dividends on Common Stock

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


	2024		2023
First quarter	$	0.22	$	0.20

See “Cash Dividends on Common Stock,” of Note 11, “Nasdaq Stockholders’ Equity,” to the condensed consolidated financial statements for further discussion of the dividends.

Debt Obligations

The following table summarizes our debt obligations by contractual maturity:


	Maturity Date	March 31, 2024		December 31, 2023
Short-term debt:		(in millions)
Commercial paper		$	224	$	291
Total short-term debt		$	224	$	291
Long-term debt - senior unsecured notes:
2025 Notes	June 2025	$	498	$	497
2026 Notes	June 2026	499		499
2028 Notes	June 2028	992		991
2029 Notes	March 2029	644		658
2030 Notes	February 2030	643		658
2031 Notes	January 2031	645		645
2032 Notes	February 2032	801		819
2033 Notes	July 2033	659		674
2034 Notes	February 2034	1,240		1,239
2040 Notes	December 2040	644		644
2050 Notes	April 2050	487		487
2052 Notes	March 2052	541		541
2053 Notes	August 2053	738		738
2063 Notes	June 2063	738		738
2023 Term Loan	November 2026	—		339
2022 Revolving Credit Facility	December 2027	(4)		(4)
Total long-term debt		$	9,765	$	10,163
Total debt obligations		$	9,989	$	10,454

For the three months ended March 31, 2024, the weighted average interest rate on our debt obligations was approximately 4.0%. 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 December 2022, Nasdaq amended and restated its previously issued $1.25 billion five-year revolving credit facility, with a new maturity date of December 16, 2027. 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 for one subsidiary. These European credit facilities, which are available in multiple currencies, totaled $180 million as of March 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. Under the 2023 Term Loan, borrowings bear interest on the principal amount outstanding at a variable interest rate based on the SOFR plus an applicable margin that varies with Nasdaq’s debt rating. On November 1, 2023, we borrowed $599 million, net of fees, under this term loan towards payment of the cash consideration due in connection with the Adenza acquisition. We made a partial repayment during the fourth quarter 2023 and paid the remaining balance in the first quarter of 2024.

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

See Note 8, “Debt Obligations,” to the condensed consolidated financial statements for further discussion of our debt obligations.

Contractual Obligations and Contingent Commitments

Nasdaq had no significant changes to our contractual obligations and contingent commitments from those disclosed in “Part I. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report Form 10-K that was filed with the SEC

February 21, 2024.

Off-Balance Sheet Arrangements

For discussion of off-balance sheet arrangements see:

Note 14, “Clearing Operations,” to the condensed consolidated financial statements for further discussion of our non-cash default fund contributions and margin deposits received for clearing operations; and
Note 17, “Commitments, Contingencies and Guarantees,” to the condensed consolidated financial statements for further discussion of:

◦Guarantees issued and credit facilities available;

◦Other guarantees; and

◦Routing brokerage activities.

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