2020 net revenues¹ were $2,903 million, an increase of 15% over 2019. Revenues in the Solutions segments² increased 11%, while Market Services revenues increased 21% due to elevated trading volumes.

Fourth quarter 2020 net revenues were $788 million, an increase of 22% over the fourth quarter of 2019. Compared to the prior year period, Solutions segments revenues increased 18% while Market Services revenues increased 29%.

Annualized Recurring Revenue (ARR)³ was $1,577 million in the fourth quarter of 2020, an increase of 9% from the prior year period, and the Solutions segments SaaS revenue increased 11% compared to the prior year period.

2020 GAAP diluted earnings per share was $5.59, an increase of 21% compared to $4.63 in 2019, while fourth quarter 2020 GAAP earnings per share was $1.34, an increase of 11% compared to $1.21 in the fourth quarter of 2019.

2020 non-GAAP⁴ diluted earnings per share was $6.18, an increase of 24% compared to $5.00 in 2019, while fourth quarter 2020 non-GAAP diluted earnings per share of $1.60 increased 24% from $1.29 in the fourth quarter of 2019.

At Nasdaq’s 2020 Investor Day, the company provided updates to its strategy, operations, and objectives.

Nasdaq announced the pending acquisition of Verafin in the fourth quarter of 2020, which is expected to expand the company’s anti-financial crime franchise while increasing growth potential.

Nasdaq’s Market Services segment sets new highs in U.S. option and European equity trading in 2020. In the fourth quarter of 2020, Nasdaq’s U.S. options market set a quarterly record of 741 million contracts traded, an increase of 71% year over year. 2020 was also the first year Nasdaq led all exchanges in total volume traded for options (inclusive of both multiply-listed equity options and index option products), building upon what is now an 11th consecutive year leading in multiply-listed equity options market share. Nasdaq also established a new decade-high annual market share of 78% in Nordic equity trading during 2020, including 79% in the fourth quarter of 2020.

ETP assets under management tracking Nasdaq indexes and derivative product volume tracking Nasdaq indexes each set new quarterly records. Overall AUM in ETPs benchmarked to Nasdaq’s proprietary indexes totaled $359 billion as of December 31, 2020, an increase of 54% compared to December 31, 2019, while the number of futures and options on futures contracts tracking Nasdaq indexes executed in the period totaled 90.2 million, an increase of 151% from 36.0 million in the fourth quarter of 2019. Net inflows into new products that launched in the fourth quarter of 2020 exceeded $1 billion, driven primarily by strong initial interest in the Invesco QQQ Innovation suite.

The Nasdaq Stock Market led U.S. exchanges for IPOs during 2020. During 2020, the Nasdaq Stock Market led U.S. exchanges with a 67% total win rate, including a 83% win rate among operating companies⁶ and a 53% win rate among special purpose acquisition companies. The Nasdaq Stock Market welcomed 316 IPOs in 2020 representing $81 billion in capital raised, first amongst U.S. exchanges, including 18 of the top 30 operating company IPOs by capital raised. New listings in 2020 included 20 companies switching their listings from NYSE to join Nasdaq, representing an aggregate of $282 billion in global equity market capitalization and included AstraZeneca, Keurig Dr Pepper, American Electric Power and Opendoor Technologies. In the fourth quarter of 2020, The Nasdaq Stock Market welcomed 199 new U.S. listings with 142 IPOs, including Airbnb, Wish and Array Technologies.

Nasdaq announces acquisition of Verafin, creating a global leader in fighting financial crime. On November 19, 2020, Nasdaq announced an agreement to acquire Verafin. The combination is expected to bring together Verafin’s comprehensive suite of anti-financial crime management products with Nasdaq’s reach and established regulatory technology leadership to create a global SaaS leader in the fight against financial crime. Based in St. John’s, Newfoundland and Labrador and founded in 2003, Verafin provides a cloud-based platform to detect, investigate, and report money laundering and financial fraud to more than 2,000 financial institutions in North America. The acquisition is expected to close in the first quarter of 2021.

Nasdaq to advance diversity through proposed new listing rule. Nasdaq filed a new proposed U.S. listing rule with the U.S. Securities and Exchange Commission (SEC) that seeks to standardize disclosure of board-level diversity statistics through a consistent disclosure framework. The proposal includes disclosure of either the recommended minimum diversity goal of two diverse directors or an explanation, and is subject to SEC approval.

Represents revenues less transaction-based expenses.

Constitutes revenues from Market Technology, Investment Intelligence and Corporate Platforms segments.

Annualized Recurring Revenue (ARR) for a given period is the annualized revenues derived from contracted termed subscription contracts. This excludes contracts that are not recurring and are one time in nature. ARR is. 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.

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.

Operating companies exclude special purpose acquisition companies and when a special purpose acquisition company completes an acquisition.

Revenues:

Market Services

Transaction-based expenses:

Transaction rebates

Brokerage, clearance and exchange fees

Total Market Services revenues less transaction-based expenses

Corporate Platforms

Investment Intelligence

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 gain on divestiture of business

Other income

Net income (loss) 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

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 PLATFORMS REVENUES

Listings Services revenues

IR & ESG Services revenues

Total Corporate Platforms revenues

INVESTMENT INTELLIGENCE REVENUES

Market Data revenues

Index revenues

Analytics revenues

Total Investment Intelligence revenues

MARKET TECHNOLOGY REVENUES

OTHER REVENUES

REVENUES LESS TRANSACTION-BASED EXPENSES

Assets

Current assets:

Cash and cash equivalents

Restricted cash and cash equivalents

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 gain on divestiture of business ⁽⁴⁾

Net (income) loss from unconsolidated investee ⁽⁵⁾

Extinguishment of debt ⁽⁶⁾

Charitable donations ⁽⁷⁾

Provision for notes receivable ⁽⁸⁾

Other ⁽⁹⁾

Total non-GAAP adjustments

Non-GAAP adjustment to the income tax provision ⁽¹⁰⁾

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. 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.

For the year ended December 31, 2019, represents the pre-tax gain on the sale of the BWise enterprise governance, risk and compliance software platform.

Primarily represents the earnings and losses recognized from our equity interest in the Options Clearing Corporation, or OCC. We will continue to exclude the earnings and losses 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.

For the year ended December 31, 2020, this represents a charge recorded in connection with the early extinguishment of our 3.875% senior unsecured notes and for the year ended December 31, 2019, this represents a charge recorded in connection with the early extinguishment of our 5.55% senior unsecured notes. These charges primarily related to a premium paid for early redemption. These charges are recorded in general, administrative and other expense in our Condensed Consolidated Statements of Income.

For 2020 represents charitable donations made to the Nasdaq Foundation, COVID-19 response and relief efforts and social justice charities recorded in general, administrative and other expense in our Condensed Consolidated Statements of Income.

For the three months ended September 30, 2020 and years ended December 31, 2020 and 2019 a provision for notes receivable associated with the funding of technology development for the consolidated audit trail recorded in general, administrative and other expense in our Condensed Consolidated Statements of Income.

For 2020 primarily includes charges associated with duplicative rent and impairment of leasehold assets related to our global headquarters move recorded in occupancy and depreciation and amortization expense in our Condensed Consolidated Statements of Income, and the reversal of a regulatory fine issued by the Swedish Financial Supervisory Authority, or SFSA, recorded in regulatory expense in our Condensed Consolidated Statements of Income. The reversal of the regulatory fine is also included in the three months ended September 30, 2020 and duplicative rent and impairment of leasehold assets related to our global headquarters move is also included in the three months ended December 31, 2020 and September 30, 2020. For 2019 primarily includes a tax reserve for certain prior year examinations recorded in general, administrative and other expense in our Condensed Consolidated Statements of Income, and certain litigation costs which are recorded in professional and contract services expense in our Condensed Consolidated Statements of Income.

The non-GAAP adjustment to the income tax provision primarily includes the tax impact of each non-GAAP adjustment. In addition, for the three months and year ended December 31, 2020, we recorded a tax benefit related to favorable audit settlements, a release of tax reserves due to statute of limitation expiration, partially offset with an increase to certain tax reserves related to certain tax filings. For the year ended December 31, 2020, we also recorded a tax benefit on compensation related deductions determined to be allowable. For the three months and year ended December 31, 2019, we also recorded a tax benefit primarily related to an adjustment to the 2018 federal and state tax returns and for the year ended December 31, 2019 we also recorded a benefit related to capital distributions from the OCC.

U.S. GAAP operating income

Non-GAAP adjustments:

Amortization expense of acquired intangible assets ⁽¹⁾

Merger and strategic initiatives ⁽²⁾

Restructuring charges ⁽³⁾

Extinguishment of debt ⁽⁴⁾

Charitable donations ⁽⁵⁾

Provision for notes receivable ⁽⁶⁾

Other ⁽⁷⁾

Total non-GAAP adjustments

Non-GAAP operating income

Revenues less transaction-based expenses

U.S. GAAP operating margin ⁽⁸⁾

Non-GAAP operating margin ⁽⁹⁾

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. 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.

For the year ended December 31, 2020, this represents a charge recorded in connection with the early extinguishment of our 3.875% senior unsecured notes and for the year ended December 31, 2019, this represents a charge recorded in connection with the early extinguishment of our 5.55% senior unsecured notes. These charges primarily related to a premium paid for early redemption. These charges are recorded in general, administrative and other expense in our Condensed Consolidated Statements of Income.

For 2020 represents charitable donations made to the Nasdaq Foundation, COVID-19 response and relief efforts and social justice charities recorded in general, administrative and other expense in our Condensed Consolidated Statements of Income.

For the three months ended September 30, 2020 and years ended December 31, 2020 and 2019 a provision for notes receivable associated with the funding of technology development for the consolidated audit trail recorded in general, administrative and other expense in our Condensed Consolidated Statements of Income.

For 2020 primarily includes charges associated with duplicative rent and impairment of leasehold assets related to our global headquarters move recorded in occupancy and depreciation and amortization expense in our Condensed Consolidated Statements of Income, and the reversal of a regulatory fine issued by the SFSA recorded in regulatory expense in our Condensed Consolidated Statements of Income. The reversal of the regulatory fine is also included in the three months ended September 30, 2020 and duplicative rent and impairment of leasehold assets related to our global headquarters move is also included in the three months ended December 31, 2020 and September 30, 2020. For 2019 primarily includes a tax reserve for certain prior year examinations recorded in general, administrative and other expense in our Condensed Consolidated Statements of Income, and certain litigation costs which are recorded in professional and contract services expense in our Condensed Consolidated Statements of Income.

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⁾

Extinguishment of debt ⁽⁴⁾

Charitable donations ⁽⁵⁾

Provision for notes receivable ⁽⁶⁾

Other ⁽⁷⁾

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. 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.

For the year ended December 31, 2020, this represents a charge recorded in connection with the early extinguishment of our 3.875% senior unsecured notes and for the year ended December 31, 2019, this represents a charge recorded in connection with the early extinguishment of our 5.55% senior unsecured notes. These charges primarily related to a premium paid for early redemption. These charges are recorded in general, administrative and other expense in our Condensed Consolidated Statements of Income.

For 2020 represents charitable donations made to the Nasdaq Foundation, COVID-19 response and relief efforts and social justice charities recorded in general, administrative and other expense in our Condensed Consolidated Statements of Income.

For the three months ended September 30, 2020 and years ended December 31, 2020 and 2019 a provision for notes receivable associated with the funding of technology development for the consolidated audit trail recorded in general, administrative and other expense in our Condensed Consolidated Statements of Income.

For 2020 primarily includes charges associated with duplicative rent and impairment of leasehold assets related to our global headquarters move recorded in occupancy and depreciation and amortization expense in our Condensed Consolidated Statements of Income, and the reversal of a regulatory fine issued by the SFSA recorded in regulatory expense in our Condensed Consolidated Statements of Income. The reversal of the regulatory fine is also included in the three months ended September 30, 2020 and duplicative rent and impairment of leasehold assets related to our global headquarters move is also included in the three months ended December 31, 2020 and September 30, 2020. For 2019 primarily includes a tax reserve for certain prior year examinations recorded in general, administrative and other expense in our Condensed Consolidated Statements of Income, and certain litigation costs which are recorded in professional and contract services expense in our Condensed Consolidated Statements of Income.

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 Platforms

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⁾

Investment Intelligence

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 share arrangement.

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, including 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 412 ETPs as of December 31, 2020, 409 ETPs as of September 30, 2020, and 412 ETPs as of December 31, 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 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.