N E W S    R E L E A S E

D A T E : July 22, 2020

Second quarter 2020 net revenues¹ were $699 million, an increase of 12% over the second quarter of 2019. Compared to the prior year period, revenues in the non-trading segments² increased 7%, primarily due to organic growth, while Market Services revenues rose 22%, driven by record trading volumes in U.S. equities and options.

The GAAP operating margin was 45% in the second quarter of 2020, up from 41% in the prior year period, while the non-GAAP operating margin³ of 53% increased from 48% in the prior year period.

Second quarter 2020 GAAP diluted earnings per share, or EPS, was $1.45, up 39% from $1.04 in the second quarter of 2019. Second quarter 2020 non-GAAP diluted EPS was $1.54, up 26% from $1.22 in the second quarter of 2019.

After taking steps in the first quarter of 2020 to increase cash reserves and eliminate near-term debt maturities, in the second quarter Nasdaq issued a $500 million 30-year bond and repaid all commercial paper and borrowings under our revolver. As a result, the company returned to lower leverage, while improving its available liquidity.

Nasdaq is working to expand our impact on society by contributing to organizations providing assistance to communities disproportionately impacted by the global health, economic, and social justice crises; increasing our support to the Nasdaq Foundation; and taking actions to foster a more diverse and inclusive corporate culture.

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 and tax rate guidance are 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.

Annualized Recurring Revenue (ARR) for a given period is the annualized revenue of active 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 at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.

Nasdaq’s exchanges delivered continued resilient performance during period of record investor engagement. Nasdaq’s electronically operated equities, options and fixed income markets operated at high performance levels during the surge of trading volume related to the COVID-19 pandemic and the rise in investor engagement. Nasdaq’s combined U.S. equities and options markets set quarterly company records for trading volumes in the second quarter of 2020.

Nasdaq’s Index business is benefiting from favorable thematic exposure to the digital economy as assets under management tracking the Nasdaq-100 index and Nasdaq indexes overall reach new quarterly records. Overall AUM in ETPs benchmarked to Nasdaq’s proprietary indexes totaled $272 billion as of June 30, 2020, an increase of 34% compared to June 30, 2019. The increase in AUM was led by a 54% rise year over year in the assets linked to the Nasdaq-100 index. The June 30, 2020 total AUM included $96 billion, or 35% of overall AUM, tracking smart beta indexes.

Nasdaq continues to see strong client traction in its Market Technology segment with five new SaaS marketplace clients and launches the Marketplace Services Platform. New order intake totaled $38 million during the second quarter of 2020, driven by strong new order intake in our market and trade surveillance business and the signing of five new SaaS marketplace customers, including surveillance deals with Tradeweb and the National Futures Association. Robinhood, the U.S. retail brokerage, has also selected Nasdaq for its Nasdaq Trade Surveillance technology to monitor their markets. Nasdaq also announced the launch of the Marketplace Services Platform, a SaaS platform which provides next-generation capabilities spanning the transaction lifecycle to facilitate exchange of assets, services and information across various types of market ecosystems. LEX, a commercial real estate securities marketplace, announced they will collaborate with Nasdaq to use the Marketplace Services Platform as the underlying technology for LEX’s alternative trading system.

Corporate Services sees success in facilitating primary capital formation, as well as helping established issuers adapt to a very dynamic investor landscape, and rising demand for sustainable practices. In the second quarter of 2020, The Nasdaq Stock Market welcomed 55 new U.S. listings, including 42 IPOs. Nasdaq’s IPO win rate totaled 67%, with an 88% IPO win rate among operating companies¹, during the second quarter of 2020. During the period, three of the largest IPOs by proceeds listed on The Nasdaq Stock Market, including Royalty Pharma PLC, Warner Music Group and ZoomInfo Technologies. In Corporate Solutions, accelerating organic growth was driven mainly by increases in demand for IR Intelligence products, which helps issuers track changes in their shareholder base and understand changing investor priorities, and include the company’s ESG advisory and reporting solutions.

Nasdaq pledges continued commitment to communities around us. Nasdaq announced further steps in its continued commitment to diversity and inclusion, which includes increased investment in the company’s internal programs, which allows us to attract, retain, and develop top talent. In addition to our previous philanthropic donations to COVID-19-related charities, Nasdaq has pledged $3 million to organizations providing critical assistance to communities disproportionately impacted by the global health, economic, and social justice crises. Nasdaq also plans to commit $10 million to the Nasdaq Foundation later this year, which will be a core component of our philanthropic efforts.

Operating companies exclude special purpose acquisition companies.

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

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

Other 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

Listings Services revenues

Corporate Solutions revenues

Total Corporate Services revenue

INFORMATION SERVICES REVENUES

Market Data revenues

Index revenues

Investment Data & Analytics revenues

Total Information Services revenues

MARKET TECHNOLOGY REVENUES

REVENUES LESS TRANSACTION-BASED EXPENSES

Assets

Current assets:

Cash and cash equivalents

Restricted cash

Financial investments

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

Noncontrolling interests

Total 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⁾

Net income from unconsolidated investee ⁽⁴⁾

Charitable contributions ⁽⁵⁾

Extinguishment of debt ⁽⁵⁾

Other ⁽⁵⁾

Total non-GAAP adjustments

Non-GAAP adjustment to the income tax provision ⁽⁶⁾

Excess tax benefits related to employee share-based compensation

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 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 will vary based on the size and frequency of the activities described above.

In September 2019, we initiated the transition of certain technology platforms to advance the company’s strategic opportunities as a technology and analytics provider and continue the realignment of certain business areas. Charges associated with this plan represent a fundamental shift in our strategy and technology as well as executive re-alignment and will be excluded for purposes of calculating non-GAAP measures as they are not reflective of ongoing operating performance or comparisons in Nasdaq’s performance between periods. For the three months ended June 30, 2020 and March 31, 2020, the restructuring charges primarily consisted of consulting services, asset impairment charges primarily related to capitalized software that was retired, and accelerated depreciation expense on certain assets as a result of a decrease in their useful life.

In the relevant periods, primarily represents net income recognized from our equity interest in OCC. In February 2019, the SEC disapproved the OCC rule change that established OCC’s 2015 capital plan and OCC suspended customer rebates and dividends to owners. 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 may 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.

We have excluded certain other charges or gains that are the result of other non-comparable events to measure operating performance. These significant items primarily include charitable contributions made to the Nasdaq Foundation and social justice charities for the three months ended June 30, 2020; donations to COVID-19 response and relief efforts for the three months ended March 31, 2020; and loss on extinguishment of debt for the three months ended March 31, 2020 and June 30, 2019.

The non-GAAP adjustment to the income tax provision primarily includes the tax impact of each non-GAAP adjustment and for the three months ended June 30, 2020 a tax benefit on previously disallowed compensation related deductions.

U.S. GAAP operating income

Non-GAAP adjustments:

Amortization expense of acquired intangible assets ⁽¹⁾

Merger and strategic initiatives ⁽²⁾

Restructuring charges ⁽³⁾

Charitable contributions ⁽⁴⁾

Extinguishment of debt ⁽⁴⁾

Other ⁽⁴⁾

Total non-GAAP adjustments

Non-GAAP operating income

Revenues less transaction-based expenses

U.S. GAAP operating margin ⁽⁵⁾

Non-GAAP operating margin ⁽⁶⁾

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 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 will vary based on the size and frequency of the activities described above.

In September 2019, we initiated the transition of certain technology platforms to advance the company’s strategic opportunities as a technology and analytics provider and continue the realignment of certain business areas. Charges associated with this plan represent a fundamental shift in our strategy and technology as well as executive re-alignment and will be excluded for purposes of calculating non-GAAP measures as they are not reflective of ongoing operating performance or comparisons in Nasdaq’s performance between periods. For the three months ended June 30, 2020 and March 31, 2020, the restructuring charges primarily consisted of consulting services, asset impairment charges primarily related to capitalized software that was retired, and accelerated depreciation expense on certain assets as a result of a decrease in their useful life.

We have excluded certain other charges or gains that are the result of other non-comparable events to measure operating performance. These significant items primarily include charitable contributions made to the Nasdaq Foundation and social justice charities for the three months ended June 30, 2020; donations to COVID-19 response and relief efforts for the three months ended March 31, 2020; and loss on extinguishment of debt for the three months ended March 31, 2020 and June 30, 2019.

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⁾

Charitable contributions ⁽⁴⁾

Extinguishment of debt ⁽⁴⁾

Other ⁽⁴⁾

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 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 will vary based on the size and frequency of the activities described above.

In September 2019, we initiated the transition of certain technology platforms to advance the company’s strategic opportunities as a technology and analytics provider and continue the realignment of certain business areas. Charges associated with this plan represent a fundamental shift in our strategy and technology as well as executive re-alignment and will be excluded for purposes of calculating non-GAAP measures as they are not reflective of ongoing operating performance or comparisons in Nasdaq’s performance between periods. For the three months ended June 30, 2020 and March 31, 2020, the restructuring charges primarily consisted of consulting services, asset impairment charges primarily related to capitalized software that was retired, and accelerated depreciation expense on certain assets as a result of a decrease in their useful life.

We have excluded certain other charges or gains that are the result of other non-comparable events to measure operating performance. These significant items primarily include charitable contributions made to the Nasdaq Foundation and social justice charities for the three months ended June 30, 2020; donations to COVID-19 response and relief efforts for the three months ended March 31, 2020; and loss on extinguishment of debt for the three months ended March 31, 2020 and June 30, 2019.

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 traded 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 for which Nasdaq and Eurex have a revenue sharing agreement.

Includes transactions executed on The Nasdaq Stock Market’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, 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 410 ETPs as of June 30, 2020, 412 ETPs as of March 31, 2020, and 374 ETPs as of June 30, 2019.

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 active 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 at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.