Third quarter 2019 net revenues¹ were $632 million. Revenues in the non-trading segments² increased 10% versus the prior year period, primarily driven by organic growth, while Market Services revenues increased 2%.

The GAAP operating margin was 36% in the third quarter of 2019, compared to 41% in the prior year period, while the non-GAAP operating margin³ of 50% increased from 48% in the prior year period.

Third quarter 2019 GAAP diluted earnings per share was $0.90 compared to $0.97 in the third quarter of 2018. Third quarter non-GAAP diluted earnings per share of $1.27 rose 12% from $1.13 in the third quarter of 2018.

During the third quarter of 2019, the company returned $150 million to its shareholders through its share repurchase program, and paid a dividend on its common stock in the aggregate of $78 million. In the first nine months of 2019, the company returned $428 million to shareholders through share repurchases and dividends.

The company is reducing its 2019 non-GAAP operating expense guidance to $1,285-$1,295 million versus the prior guidance of $1,295 to $1,320 million.

Represents revenues less transaction-based expenses.

Constitutes revenues from Market Technology, Information Services and Corporate Services segments.

Refer to our reconciliations of U.S. GAAP to non-GAAP net income, diluted earnings per share, operating income and operating expenses, included in the attached schedules.

U.S. GAAP operating expense is not provided due to the inherent difficulty in quantifying certain amounts due to a variety of factors including the unpredictability in the movement in foreign currency rates, as well as future charges or reversals outside of the normal course of business.

Nasdaq continues to see strong client traction in its Market Technology segment. Annualized recurring revenue¹, or ARR, totaled $255 million in the third quarter of 2019, an increase of 17% year over year. New order intake totaled $62 million during the third quarter of 2019, and included a new exchange and surveillance customer in South East Asia, contract extensions with Bolsa Mexicana de Valores and a European exchange for market surveillance and a contract extension for trading and surveillance solutions with the New Zealand Exchange. Nasdaq also continued to realize strong growth in Nasdaq Surveillance Services.

Index revenues and ETP assets under management tracking Nasdaq indexes each set a new quarterly record. Overall AUM in ETPs benchmarked to Nasdaq’s proprietary index products totaled $207 billion as of September 30, 2019, an increase of $1 billion from compared to September 30, 2018. The September 30, 2019 total AUM included $92 billion, or 44%, tracking smart beta indexes. Additionally, the Nasdaq-100 futures complex licensed to CME continues to see improved market volumes with 32 million contracts traded in the third quarter of 2019 compared to 25 million in the prior year period.

The Nasdaq Stock Market led U.S. exchanges for IPOs during the first nine months of 2019 with a 76% win rate. In the U.S. market, The Nasdaq Stock Market welcomed 66 new listings in the third quarter of 2019, including 41 IPOs. The U.S. IPO win rate totaled 69% during the third quarter of 2019 and 76% during the first nine months of 2019. Highlights from the third quarter included IPOs from 10x Genomics Inc., Peloton Interactive, Afya Limited and Datadog, as well as the exchange listing transfers of Interactive Brokers Group and Exelon Corporation to The Nasdaq Stock Market. Nasdaq’s European exchanges added 8 new listings, including 4 IPOs, bringing total Nordic and Baltic listed companies at September 30, 2019 to 1,028, an increase of 2% from September 30, 2018.

Nasdaq acquired the Center for Board Excellence. Nasdaq acquired the Center for Board Excellence (CBE), a privately-held provider of corporate governance and compliance solutions for boards of directors, CEOs, corporate secretaries and general counsels. Nasdaq plans to combine CBE with its Nasdaq Governance Solutions business, which includes board portal and collaboration technology solutions. The combination establishes a leading provider of technology, research, insights and consultative services designed to advance governance excellence and collaboration at organizations worldwide.

Nasdaq Private Market and PJT Partners to deliver enhanced execution for general partner (GP) sponsored secondary transactions. Nasdaq Private Market announced an agreement with PJT Partners to provide enhanced execution capabilities for GP-sponsored secondary transactions using the Nasdaq Private Market technology platform. The market for GP-sponsored secondary transactions has seen significant transaction volume growth over the last six years, and Nasdaq believes that the combined offering can bring greater standardization and efficiency to this market while appealing to an even broader universe of general partners, limited partners and secondary investors.

  MEDIA RELATIONS CONTACT:

  Allan Schoenberg

  +1.212.231.5534

  allan.schoenberg@nasdaq.com

INVESTOR RELATIONS CONTACT:

Ed Ditmire, CFA

+1.212.401.8737

ed.ditmire@nasdaq.com

Revenues:

Market Services

Transaction-based expenses:

Transaction rebates

Brokerage, clearance and exchange fees

Total Market Services revenues less transaction-based expenses

Corporate Services

Information Services

Market Technology

Other Revenues

Revenues less transaction-based expenses

Operating Expenses:

Compensation and benefits

Professional and contract services

Computer operations and data communications

Occupancy

General, administrative and other

Marketing and advertising

Depreciation and amortization

Regulatory

Merger and strategic initiatives

Restructuring charges

Total operating expenses

Operating income

Interest income

Interest expense

Net loss on divestiture of business

Other investment income

Net income from unconsolidated investees

Income before income taxes

Income tax provision

Net income attributable to Nasdaq

Per share information:

Basic earnings per share

Diluted earnings per share

Cash dividends declared per common share

Weighted-average common shares outstanding for earnings per share:

Basic

Diluted

MARKET SERVICES REVENUES

Equity Derivative Trading and Clearing Revenues

Transaction-based expenses:

Transaction rebates

Brokerage, clearance and exchange fees

Total net equity derivative trading and clearing revenues

Cash Equity Trading Revenues

Transaction-based expenses:

Transaction rebates

Brokerage, clearance and exchange fees

Total net cash equity trading revenues

Fixed Income and Commodities Trading and Clearing Revenues

Transaction-based expenses:

Transaction rebates

Brokerage, clearance and exchange fees

Total net fixed income and commodities trading and clearing revenues

Trade Management Services Revenues

Total net Market Services revenues

CORPORATE SERVICES REVENUES

Corporate Solutions revenues

Listings Services revenues

Total Corporate Services revenues

INFORMATION SERVICES REVENUES

Market Data revenues

Index revenues

Investment Data & Analytics revenues

Total Information Services revenues

MARKET TECHNOLOGY REVENUES

OTHER REVENUES

REVENUES LESS TRANSATION-BASED EXPENSES

Current assets:

Cash and cash equivalents

Restricted cash

Financial investments, at fair value

Receivables, net

Default funds and margin deposits

Other current assets

Total current assets

Property and equipment, net

Goodwill

Intangible assets, net

Operating lease assets

Other non-current assets

Total assets

Liabilities

Current liabilities:

Accounts payable and accrued expenses

Section 31 fees payable to SEC

Accrued personnel costs

Deferred revenue

Other current liabilities

Default funds and margin deposits

Short-term debt

Total current liabilities

Long-term debt

Deferred tax liabilities, net

Operating lease liabilities

Other non-current liabilities

Total liabilities

Commitments and contingencies

Equity

Nasdaq stockholders’ equity:

Common stock

Additional paid-in capital

Common stock in treasury, at cost

Accumulated other comprehensive loss

Retained earnings

Total Nasdaq stockholders’ equity

Total liabilities and equity

U.S. GAAP net income attributable to Nasdaq

Non-GAAP adjustments:

Amortization expense of acquired intangible assets ⁽¹⁾

Merger and strategic initiatives ⁽²⁾

Restructuring charges ⁽³⁾

Provision for notes receivable ⁽⁴⁾

Net income from unconsolidated investee ⁽⁵⁾

Net loss on divestiture of business ⁽⁶⁾

Extinguishment of debt ⁽⁷⁾

Clearing default ⁽⁸⁾

Other

Total non-GAAP adjustments

Non-GAAP adjustment to the income tax provision ⁽⁹⁾

Impact of newly enacted U.S. tax legislation ⁽¹⁰⁾

Total non-GAAP adjustments, net of tax

Non-GAAP net income attributable to Nasdaq

U.S. GAAP diluted earnings per share

Total adjustments from non-GAAP net income above

Non-GAAP diluted earnings per share

Weighted-average diluted common shares outstanding for earnings per share:

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.

We have pursued various strategic initiatives and completed acquisitions and divestitures in recent years that have resulted in expenses which would not have otherwise been incurred. These expenses generally include integration costs, as well as legal, due diligence and other third party transaction costs and will vary based on the size and frequency of the activities described above.

In September 2019, Nasdaq initiated the transition of certain technology platforms to advance the company’s strategic opportunities as a technology and analytics provider and continue the realignment of certain business areas. In connection with these restructuring efforts, we are retiring certain elements of our marketplace infrastructure and technology product offerings as we implement the Nasdaq Financial Framework internally and externally. For the three months ended September 30, 2019, we recorded $30 million in charges primarily related to asset impairment charges mainly related to capitalized software. Refer to the non-GAAP information section of the earnings release for further discussion of why we consider restructuring charges to be a non-GAAP adjustment.

For the three months ended September 30, 2019, we recorded a provision for notes receivable associated with the funding of technology development for the consolidated audit trail. This charge is included in general, administrative and other expense in our Condensed Consolidated Statements of Income.

In February 2019, the SEC disapproved the OCC rule change that established OCC’s 2015 capital plan. Following the disapproval of the OCC capital plan, OCC suspended customer rebates and dividends to owners, including the unpaid dividend on 2018 results which Nasdaq expected to receive in March 2019. In the relevant periods, we recognized our share of OCC’s net income, which was $15 million for the three months ended September 30, 2019, $9 million for the three months ended June 30, 2019 and $5 million for the three months ended September 30, 2018. We will continue to exclude net income related to our share of OCC’s earnings for purposes of calculating non-GAAP measures as our income on this investment will vary significantly compared to prior years. This will provide a more meaningful analysis of Nasdaq’s ongoing operating performance or comparisons in Nasdaq’s performance between periods.

In April 2018, we sold our Public Relations Solutions and Digital Media Services businesses and recognized a pre-tax gain on the sale of $33 million ($14 million after tax). This includes a post-closing working capital adjustment of $8 million ($5 million after tax) recorded during the three months ended September 30, 2018.

For the three months ended June 30, 2019, in connection with the early extinguishment of our 5.55% senior unsecured notes, we recorded a charge of $11 million primarily related to a premium paid for early redemption. This charge is included in general, administrative and other expense in our Condensed Consolidated Statements of Income.

For the three months ended September 30, 2018, we recorded an $8 million loss related to the default of a Nasdaq Clearing member.

The non-GAAP adjustment to the income tax provision primarily includes the tax impact of each non-GAAP adjustment.

For the three months ended September 30, 2018, we recorded a decrease to tax expense of $4 million, which reflects the remeasurement of certain deferred tax assets and liabilities associated with the impact of the Tax Cuts and Jobs Act.

U.S. GAAP operating income

Non-GAAP adjustments:

Amortization expense of acquired intangible assets ⁽¹⁾

Merger and strategic initiatives ⁽²⁾

Restructuring charges ⁽³⁾

Provision for notes receivable ⁽⁴⁾

Extinguishment of debt ⁽⁵⁾

Clearing default ⁽⁶⁾

Other

Total non-GAAP adjustments

Non-GAAP operating income

Revenues less transaction-based expenses

U.S. GAAP operating margin ⁽⁷⁾

Non-GAAP operating margin ⁽⁸⁾

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.

We have pursued various strategic initiatives and completed acquisitions and divestitures in recent years that have resulted in expenses which would not have otherwise been incurred. These expenses generally include integration costs, as well as legal, due diligence and other third party transaction costs and will vary based on the size and frequency of the activities described above.

In September 2019, Nasdaq initiated the transition of certain technology platforms to advance the company’s strategic opportunities as a technology and analytics provider and continue the realignment of certain business areas. In connection with these restructuring efforts, we are retiring certain elements of our marketplace infrastructure and technology product offerings as we implement the Nasdaq Financial Framework internally and externally. For the three months ended September 30, 2019, we recorded $30 million in charges primarily related to asset impairment charges mainly related to capitalized software. Refer to the non-GAAP information section of the earnings release for further discussion of why we consider restructuring charges to be a non-GAAP adjustment.

For the three months ended September 30, 2019, we recorded a provision for notes receivable associated with the funding of technology development for the consolidated audit trail. This charge is included in general, administrative and other expense in our Condensed Consolidated Statements of Income.

For the three months ended June 30, 2019, in connection with the early extinguishment of our 5.55% senior unsecured notes, we recorded a charge of $11 million primarily related to a premium paid for early redemption. This charge is included in general, administrative and other expense in our Condensed Consolidated Statements of Income.

For the three months ended September 30, 2018, we recorded an $8 million loss related to the default of a Nasdaq Clearing member.

U.S. GAAP operating margin equals U.S. GAAP operating income divided by revenues less transaction-based expenses.

Non-GAAP operating margin equals non-GAAP operating income divided by revenues less transaction-based expenses.

U.S. GAAP operating expenses

Non-GAAP adjustments:

Amortization expense of acquired intangible assets ⁽¹⁾

Merger and strategic initiatives ⁽²⁾

Restructuring charges ⁽³⁾

Provision for notes receivable ⁽⁴⁾

Extinguishment of debt ⁽⁵⁾

Clearing default ⁽⁶⁾

Other

Total non-GAAP adjustments

Non-GAAP operating expenses

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.

We have pursued various strategic initiatives and completed acquisitions and divestitures in recent years that have resulted in expenses which would not have otherwise been incurred. These expenses generally include integration costs, as well as legal, due diligence and other third party transaction costs and will vary based on the size and frequency of the activities described above.

In September 2019, Nasdaq initiated the transition of certain technology platforms to advance the company’s strategic opportunities as a technology and analytics provider and continue the realignment of certain business areas. In connection with these restructuring efforts, we are retiring certain elements of our marketplace infrastructure and technology product offerings as we implement the Nasdaq Financial Framework internally and externally. For the three months ended September 30, 2019, we recorded $30 million in charges primarily related to asset impairment charges mainly related to capitalized software. Refer to the non-GAAP information section of the earnings release for further discussion of why we consider restructuring charges to be a non-GAAP adjustment.

For the three months ended September 30, 2019, we recorded a provision for notes receivable associated with the funding of technology development for the consolidated audit trail. This charge is included in general, administrative and other expense in our Condensed Consolidated Statements of Income.

For the three months ended June 30, 2019, in connection with the early extinguishment of our 5.55% senior unsecured notes, we recorded a charge of $11 million primarily related to a premium paid for early redemption. This charge is included in general, administrative and other expense in our Condensed Consolidated Statements of Income.

For the three months ended September 30, 2018, we recorded an $8 million loss related to the default of a Nasdaq Clearing member.

Market Services

Equity Derivative Trading and Clearing

U.S. equity options

Total industry average daily volume (in millions)

Nasdaq PHLX matched market share

The Nasdaq Options Market matched market share

Nasdaq BX Options matched market share

Nasdaq ISE Options matched market share

Nasdaq GEMX Options matched market share

Nasdaq MRX Options matched market share

Total matched market share executed on Nasdaq’s exchanges

Nasdaq Nordic and Nasdaq Baltic options and futures

Total average daily volume options and futures contracts ⁽¹⁾

Cash Equity Trading

Total U.S.-listed securities

Total industry average daily share volume (in billions)

Matched share volume (in billions)

The Nasdaq Stock Market matched market share

Nasdaq BX matched market share

Nasdaq PSX matched market share

Total matched market share executed on Nasdaq’s exchanges

Market share reported to the FINRA/Nasdaq Trade Reporting Facility

Total market share⁽²⁾

Nasdaq Nordic and Nasdaq Baltic securities

Average daily number of equity trades executed on Nasdaq’s exchanges

Total average daily value of shares traded (in billions)

Total market share executed on Nasdaq’s exchanges

Fixed Income and Commodities Trading and Clearing

Fixed Income

U.S. fixed income volume ($ billions traded)

Total average daily volume of Nasdaq Nordic and Nasdaq Baltic fixed income contracts

Commodities

Power contracts cleared (TWh) ⁽³⁾

Corporate Services

Initial public offerings

The Nasdaq Stock Market

Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic

Total new listings

The Nasdaq Stock Market⁽⁴⁾

Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic⁽⁵⁾

Number of listed companies

The Nasdaq Stock Market⁽⁶⁾

Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic⁽⁷⁾

Information Services

Number of licensed exchange traded products (ETPs)

ETP assets under management (AUM) tracking Nasdaq indexes (in billions)

Market Technology

Order intake (in millions)⁽⁸⁾

Annualized recurring revenues (in millions)⁽⁹⁾

Includes Finnish option contracts traded on EUREX Group.

Includes transactions executed on Nasdaq’s, Nasdaq BX’s and Nasdaq PSX’s systems plus trades reported through the Financial Industry Regulatory Authority/Nasdaq Trade Reporting Facility.

Transactions executed on Nasdaq Commodities or OTC and reported for clearing to Nasdaq Commodities measured by Terawatt hours (TWh).

New listings include IPOs, including those completed on a best efforts basis, issuers that switched from other listing venues, closed- end funds and separately listed ETPs.

New listings include IPOs and represent companies listed on the Nasdaq Nordic and Nasdaq Baltic exchanges and companies on the alternative markets of Nasdaq First North.

Number of total listings on The Nasdaq Stock Market at period end, including 382 ETPs as of September 30, 2019, 374 ETPs as of June 30, 2019, and 390 ETPs as of September 30, 2018.

Represents companies listed on the Nasdaq Nordic and Nasdaq Baltic exchanges and companies on the alternative markets of Nasdaq First North at period end.

Total contract value of orders signed during the period.

Annualized Recurring Revenue, or ARR, for a given period is the annualized revenue of Market Technology support and SaaS subscription contracts. ARR is currently one of our key performance metrics to assess the health and trajectory of our 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. ARR is not a forecast and the active contracts during the reporting period used in calculating ARR may or may not be extended or renewed by our customers.

NEWS RELEASE

DATE: October 23, 2019