Nasdaq(NDAQ) - 2025 Q2 - Quarterly Report

Part I. FINANCIAL INFORMATION Item 1. Financial Statements Nasdaq's unaudited H1 2025 financial statements, including balance sheets, income, and cash flows, reflect strong net income and EPS growth Condensed Consolidated Balance Sheets The balance sheet shows a slight decrease in total assets and liabilities, while total equity increased, reflecting a stronger financial position as of June 30, 2025, compared to December 31, 2024 Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (millions) | December 31, 2024 (millions) | | :-------------------------- | :----------------------- | :------------------------- | | Total assets | $30,383 | $30,395 | | Total liabilities | $18,565 | $19,195 | | Total equity | $11,818 | $11,200 | | Goodwill | $14,328 | $13,957 | | Long-term debt | $8,678 | $9,081 | Condensed Consolidated Statements of Income Nasdaq reported substantial growth in total revenues, revenues less transaction-based expenses, operating income, and net income attributable to Nasdaq for both the three and six months ended June 30, 2025, compared to the prior year, indicating strong operational performance Three Months Ended June 30: | Metric | 2025 (millions) | 2024 (millions) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :--------- | | Total revenues | $2,090 | $1,792 | 16.5% | | Revenues less transaction-based expenses | $1,306 | $1,159 | 12.7% | | Operating income | $568 | $423 | 34.2% | | Net income attributable to Nasdaq | $452 | $222 | 103.0% | | Diluted earnings per share | $0.78 | $0.38 | 105.3% | | Cash dividends declared per common share | $0.27 | $0.24 | 12.5% | Six Months Ended June 30: | Metric | 2025 (millions) | 2024 (millions) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :--------- | | Total revenues | $4,180 | $3,469 | 20.5% | | Revenues less transaction-based expenses | $2,543 | $2,277 | 11.7% | | Operating income | $1,115 | $833 | 33.8% | | Net income attributable to Nasdaq | $847 | $456 | 85.8% | | Diluted earnings per share | $1.46 | $0.79 | 84.8% | | Cash dividends declared per common share | $0.51 | $0.46 | 10.9% | Condensed Consolidated Statements of Comprehensive Income Comprehensive income attributable to Nasdaq saw a substantial increase for both the three and six months ended June 30, 2025, primarily driven by net income growth and positive foreign currency translation adjustments for the six-month period Three Months Ended June 30: | Metric | 2025 (millions) | 2024 (millions) | | :-------------------------------- | :-------------- | :-------------- | | Net income | $452 | $222 | | Foreign currency translation, net | $22 | $33 | | Total other comprehensive income (loss), net of tax | $27 | $33 | | Comprehensive income attributable to Nasdaq | $479 | $255 | Six Months Ended June 30: | Metric | 2025 (millions) | 2024 (millions) | | :-------------------------------- | :-------------- | :-------------- | | Net income | $846 | $455 | | Foreign currency translation, net | $228 | $(99) | | Total other comprehensive income (loss), net of tax | $230 | $(87) | | Comprehensive income attributable to Nasdaq | $1,077 | $369 | Condensed Consolidated Statements of Changes in Stockholders' Equity Total Nasdaq stockholders' equity increased to $11,811 million as of June 30, 2025, from $10,898 million a year prior, primarily due to higher retained earnings and other comprehensive income Condensed Consolidated Statements of Changes in Stockholders' Equity | Metric | June 30, 2025 (millions) | June 30, 2024 (millions) | | :-------------------------- | :----------------------- | :----------------------- | | Total Nasdaq stockholders' equity | $11,811 | $10,898 | | Retained earnings | $8,955 | $8,016 | | Common stock in treasury, at cost | $(706) | $(641) | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities increased significantly for the six months ended June 30, 2025, while net cash used in investing and financing activities also increased, leading to an overall net decrease in cash and cash equivalents Six Months Ended June 30: | Cash Flow Activity | 2025 (millions) | 2024 (millions) | | :-------------------------------- | :-------------- | :-------------- | | Net cash provided by operating activities | $1,409 | $990 | | Net cash used in investing activities | $(317) | $(18) | | Net cash used in financing activities | $(2,545) | $(2,333) | | Net decrease in cash and cash equivalents and restricted cash and cash equivalents | $(805) | $(1,641) | | Cash and cash equivalents, restricted cash and cash equivalents at end of period | $4,201 | $5,477 | Notes to Condensed Consolidated Financial Statements The notes provide detailed explanations and breakdowns of Nasdaq's financial performance, accounting policies, and significant events, including segment information, revenue recognition, debt obligations, and restructuring activities Note 1. Organization and Nature of Operations Nasdaq operates as a global technology company serving capital markets, structured into three primary business segments: Capital Access Platforms, Financial Technology, and Market Services, each offering diverse data, analytics, software, and exchange capabilities - Nasdaq's business segments are Capital Access Platforms, Financial Technology, and Market Services[34] - Capital Access Platforms includes Data & Listing Services, Index, and Workflow & Insights[35] - Financial Technology comprises Financial Crime Management Technology, Regulatory Technology, and Capital Markets Technology[43] - Market Services includes equity derivatives trading, cash equity trading, Nordic fixed income trading & clearing, Nordic commodities, and U.S. Tape plans data[46] Note 2. Basis of Presentation and Principles of Consolidation The condensed consolidated financial statements are unaudited, prepared in accordance with U.S. GAAP, and include Nasdaq's wholly-owned subsidiaries and entities where it holds a controlling financial interest, with equity method accounting applied for significant influence investments - Financial statements are unaudited and prepared in accordance with U.S. GAAP[48][49] - Equity method accounting is used for investments where Nasdaq exercises significant influence, such as its interest in OCC[48] Note 3. Revenue from Contracts with Customers Revenue disaggregation shows that Capital Access Platforms and Financial Technology segments primarily recognize revenue over time, while Market Services largely recognizes revenue at a point in time. Total revenues less transaction-based expenses increased for both the three and six months ended June 30, 2025 Revenues less transaction-based expenses (Three Months Ended June 30): | Segment | 2025 (millions) | 2024 (millions) | | :-------------------------- | :-------------- | :-------------- | | Capital Access Platforms | $527 | $481 | | Financial Technology | $464 | $420 | | Market Services, net | $306 | $250 | | Other revenues | $9 | $8 | | Total | $1,306 | $1,159 | Revenues less transaction-based expenses (Six Months Ended June 30): | Segment | 2025 (millions) | 2024 (millions) | | :-------------------------- | :-------------- | :-------------- | | Capital Access Platforms | $1,042 | $960 | | Financial Technology | $896 | $813 | | Market Services, net | $587 | $486 | | Other revenues | $18 | $18 | | Total | $2,543 | $2,277 | Unsatisfied Performance Obligations (contract durations > 1 year) as of June 30, 2025: | Segment | Total (millions) | | :-------------------------------- | :--------------- | | Financial Crime Management Technology | $770 | | Regulatory Technology | $898 | | Capital Markets Technology | $1,307 | | Workflow & Insights | $346 | | Total | $3,321 | Note 4. Divestitures Nasdaq completed the transfer of its Nordic power futures business in June 2025 and the sale of its Nasdaq Risk Modelling for Catastrophes business in April 2025, resulting in a net gain on divestitures of $39 million for the periods presented - Nordic power futures business transferred in June 2025; commodities clearing and trading services expected to wind down by Q2 2026[60] - Nasdaq Risk Modelling for Catastrophes business sold in April 2025[61] - Net gain on divestitures was $39 million for both the three and six months ended June 30, 2025[23][61] Note 5. Goodwill and Acquired Intangible Assets Goodwill increased to $14,328 million as of June 30, 2025, primarily due to foreign currency translation adjustments, while net acquired intangible assets slightly decreased. No impairment charges were recorded for either asset class during the periods Goodwill by Business Segment: | Segment | December 31, 2024 (millions) | June 30, 2025 (millions) | | :-------------------------- | :----------------------- | :----------------------- | | Capital Access Platforms | $4,127 | $4,280 | | Financial Technology | $7,925 | $7,946 | | Market Services | $1,905 | $2,102 | | Total | $13,957 | $14,328 | - Total intangible assets, net, were $6,741 million as of June 30, 2025, down from $6,905 million at December 31, 2024[65] - No impairment of goodwill or intangible assets was recorded for the three and six months ended June 30, 2025 and 2024[63][65] Note 6. Investments Net income from unconsolidated investees, primarily from the 40.0% equity interest in OCC, significantly increased for both the three and six months ended June 30, 2025, driven by higher industry volumes Net Income from Unconsolidated Investees: | Period | 2025 (millions) | 2024 (millions) | Change (%) | | :-------------------------- | :-------------- | :-------------- | :--------- | | Three Months Ended June 30 | $23 | $2 | 1050% | | Six Months Ended June 30 | $50 | $6 | 733% | - Equity method investments primarily include Nasdaq's 40.0% equity interest in OCC[70] Note 7. Deferred Revenue Deferred revenue increased to $929 million as of June 30, 2025, with the majority expected to be recognized within the remainder of 2025 and 2026, reflecting future performance obligations - Total deferred revenue was $929 million as of June 30, 2025, up from $788 million at December 31, 2024[74] Expected Recognition of Deferred Revenue (as of June 30, 2025): | Fiscal Year | Amount (millions) | | :---------- | :---------------- | | Remainder of 2025 | $693 | | 2026 | $182 | | 2027 | $31 | | 2028 | $12 | | 2029 | $6 | | 2030+ | $5 | | Total | $929 | Note 8. Debt Obligations Total debt obligations decreased to $9,178 million as of June 30, 2025, primarily due to the full repayment of 2025 Notes and partial repurchases of other senior unsecured notes. Nasdaq remained in compliance with all debt covenants - Total debt obligations were $9,178 million as of June 30, 2025, down from $9,480 million at December 31, 2024[79] - Repaid $400 million of 2025 Notes and repurchased $279 million aggregate principal amount of 2028, 2034, and 2052 Notes in Q1 2025[82][285] - The weighted average interest rate on debt obligations was approximately 3.7% as of June 30, 2025[286] - Nasdaq was in compliance with the covenants of all debt obligations as of June 30, 2025[93] Note 9. Retirement Plans Retirement plan expenses for the three and six months ended June 30, 2025, were $10 million and $17 million, respectively. The six-month expense for 2024 included a $23 million pre-tax loss from the final termination of the U.S. pension plan Retirement Plans Expense (in millions): | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three Months Ended June 30 | $10 | $8 | | Six Months Ended June 30 | $17 | $38 | - A pre-tax loss of $23 million was recorded in the first quarter of 2024 due to the final settlement of the U.S. pension plan[95] Note 10. Share-Based Compensation Share-based compensation expense increased for both the three and six months ended June 30, 2025. Unrecognized compensation costs for restricted stock and PSUs are $179 million and $113 million, respectively, with no stock options granted or exercised Share-Based Compensation Expense Before Income Taxes (in millions): | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three Months Ended June 30 | $46 | $39 | | Six Months Ended June 30 | $81 | $69 | - Total unrecognized compensation cost related to restricted stock is $179 million, expected to be recognized over a weighted-average period of 2.5 years[101] - Total unrecognized compensation cost related to outstanding PSU awards is $113 million, expected to be recognized over a weighted-average period of 1.6 years[105] - No stock option awards were granted or exercised for the three and six months ended June 30, 2025 and 2024[106] Note 11. Nasdaq Stockholders' Equity Nasdaq's common stock outstanding decreased slightly, while the share repurchase program has $1.5 billion remaining authorization. Quarterly cash dividends increased to $0.27 per share in Q2 2025 - Common stock outstanding was 573,914,395 shares as of June 30, 2025, compared to 575,062,217 shares at December 31, 2024[108] - The remaining aggregate authorized amount under the existing share repurchase program was $1.5 billion as of June 30, 2025[111] Share Repurchase Activity (Six Months Ended June 30, 2025): | Metric | Value | | :-------------------------------- | :---------------- | | Number of shares of common stock repurchased | 2,789,445 | | Average price paid per share | $77.07 | | Total purchase price (in millions) | $215 | Quarterly Cash Dividends Paid Per Common Share: | Quarter | 2025 | 2024 | | :------------ | :----- | :----- | | First quarter | $0.24 | $0.22 | | Second quarter | $0.27 | $0.24 | | Total | $0.51 | $0.46 | Note 12. Earnings Per Share Both basic and diluted earnings per share significantly increased for the three and six months ended June 30, 2025, reflecting strong net income growth - Diluted earnings per share increased to $0.78 for the three months ended June 30, 2025, from $0.38 in 2024[119] - Diluted earnings per share increased to $1.46 for the six months ended June 30, 2025, from $0.79 in 2024[119] Note 13. Fair Value of Financial Instruments Nasdaq's financial investments measured at fair value primarily consist of highly rated European government debt securities. The company utilizes derivative instruments solely for hedging purposes, not for trading or speculation Total Assets at Fair Value (Level 1): | Date | Amount (millions) | | :------------------- | :---------------- | | June 30, 2025 | $84 | | December 31, 2024 | $166 | - Derivative instruments are utilized primarily to reduce volatility of earnings and cash flows associated with foreign exchange rates, not for trading or speculative purposes[123][127] Note 14. Clearing Operations Nasdaq Clearing, authorized under EMIR, acts as a Central Counterparty (CCP) for various markets. The company completed the transfer of its Nordic power futures business and ceased seafood derivatives clearing. Clearing member default fund contributions and margin deposits totaled $12,138 million as of June 30, 2025 - Nasdaq Clearing acts as the Central Counterparty (CCP) for exchange and OTC trades across multiple asset classes[132][133] - The Nordic power futures business was transferred in June 2025, and seafood derivatives clearing ceased by March 31, 2025[132] Clearing Member Default Fund Contributions and Margin Deposits (June 30, 2025): | Type | Cash Contributions (millions) | Non-Cash Contributions (millions) | Total Contributions (millions) | | :-------------------------- | :---------------------------- | :------------------------------ | :----------------------------- | | Default fund contributions | $1,198 | $149 | $1,347 | | Margin deposits | $4,020 | $6,771 | $10,791 | | Total | $5,218 | $6,920 | $12,138 | - Total derivative contracts cleared decreased to 37,870,236 for the six months ended June 30, 2025, from 40,121,773 in 2024[154] Note 15. Leases Nasdaq's operating lease assets and liabilities, primarily for real estate, increased as of June 30, 2025. Total lease cost remained relatively stable for the periods presented - Operating lease assets were $441 million as of June 30, 2025, up from $375 million at December 31, 2024[156] - Total lease liabilities were $510 million as of June 30, 2025, up from $443 million at December 31, 2024[156] Total Lease Cost (in millions): | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three Months Ended June 30 | $30 | $27 | | Six Months Ended June 30 | $58 | $56 | Note 16. Income Taxes The effective tax rate decreased significantly for both the three and six months ended June 30, 2025, primarily due to a tax benefit related to former Adenza employees and an intra-group IP transfer. Nasdaq is evaluating the impact of the recently signed One Big Beautiful Bill Act (OBBBA) Effective Tax Rate: | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30 | 17.5% | 34.9% | | Six Months Ended June 30 | 18.3% | 30.3% | - The lower effective tax rate was primarily due to a tax benefit related to payments made to former Adenza employees and the completion of an intra-group transfer of certain intellectual property rights[162] - Nasdaq is evaluating the comprehensive financial impact of the One Big Beautiful Bill Act (OBBBA) and anticipates a positive, but not material, impact on future earnings[164] Note 17. Commitments, Contingencies and Guarantees Nasdaq has various guarantees and credit facilities, primarily supporting its clearing operations. The European Commission is conducting an inspection related to a potential competition law concern regarding Nordic financial derivatives trading - Financial guarantees issued to Nasdaq totaled $4 million as of June 30, 2025 and December 31, 2024[167] - Available liquidity from European credit facilities totaled $203 million as of June 30, 2025, none of which was utilized[167] - The European Commission conducted an inspection at Nasdaq Stockholm offices related to a potential competition law concern regarding the trading of Nordic financial derivatives[172] - Management believes that potential censures, fines, or penalties from ongoing examinations or inquiries will not have a material impact on consolidated financial position or results of operations[174] Note 18. Business Segments All three business segments—Capital Access Platforms, Financial Technology, and Market Services—reported increased operating income for both the three and six months ended June 30, 2025. The U.S. remains the largest geographic source of revenue Operating Income (Three Months Ended June 30): | Segment | 2025 (millions) | 2024 (millions) | Change (%) | | :-------------------------- | :-------------- | :-------------- | :--------- | | Capital Access Platforms | $306 | $271 | 12.9% | | Financial Technology | $217 | $199 | 9.0% | | Market Services | $194 | $146 | 32.9% | | Corporate Items (loss) | $(149) | $(193) | (22.8)% | Operating Income (Six Months Ended June 30): | Segment | 2025 (millions) | 2024 (millions) | Change (%) | | :-------------------------- | :-------------- | :-------------- | :--------- | | Capital Access Platforms | $613 | $551 | 11.3% | | Financial Technology | $414 | $375 | 10.4% | | Market Services | $367 | $277 | 32.5% | | Corporate Items (loss) | $(279) | $(370) | (24.6)% | Total Gross Revenues by Geographic Area (Six Months Ended June 30): | Region | 2025 (millions) | 2024 (millions) | | :------------- | :-------------- | :-------------- | | United States | $3,385 | $2,725 | | All other countries | $795 | $744 | | Total | $4,180 | $3,469 | Note 19. Restructuring Charges Nasdaq initiated the Adenza restructuring program in Q4 2023, expanded in Q4 2024, expecting $140 million in pre-tax charges and $140 million in annual cost savings by the end of 2025. The divisional realignment program was completed in September 2024, leading to a significant decrease in restructuring charges for 2025 - The Adenza restructuring program was initiated in Q4 2023 and expanded in Q4 2024, with approximately $140 million in expected pre-tax charges[187] - Nasdaq expects to achieve $140 million in annual cost savings (expense synergies) by the end of 2025, with approximately $130 million actioned through June 30, 2025[245] - The divisional realignment program was completed as of September 30, 2024[190] Total Restructuring Charges (in millions): | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three Months Ended June 30 | $9 | $56 | | Six Months Ended June 30 | $14 | $82 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Nasdaq's financial condition and results, highlighting strong segment performance, revenue, and earnings growth Executive Overview Nasdaq, a global technology company, demonstrated strong performance in Q2 2025, extending its listing leadership, achieving record ETP AUM, delivering 12% ARR growth in Financial Technology, and recording high cash equities and derivatives revenue in Market Services - Nasdaq extended its listing leadership to 46 consecutive quarters and had the highest number of first half listings since 2021[197] - Index ETP Assets Under Management (AUM) reached an all-time high of $745 billion at quarter-end[197] - The Financial Technology segment delivered 12% Annualized Recurring Revenue (ARR) growth[197] - Market Services delivered record cash equities and derivatives revenue in the U.S., including a record $102.5 billion executed in Nasdaq's Closing Cross[197] Nasdaq's Operating Results Nasdaq's operating results for Q2 and YTD 2025 show significant increases in revenues less transaction-based expenses, operating income, net income, and diluted EPS, alongside growth in Annualized Recurring Revenue (ARR) and SaaS revenues Key Financial Performance (Three Months Ended June 30): | Metric | 2025 (millions) | 2024 (millions) | Percentage Change | | :-------------------------------- | :-------------- | :-------------- | :---------------- | | Revenues less transaction-based expenses | $1,306 | $1,159 | 12.7% | | Operating income | $568 | $423 | 34.2% | | Net income attributable to Nasdaq | $452 | $222 | 103.0% | | Diluted earnings per share | $0.78 | $0.38 | 103.0% | Key Financial Performance (Six Months Ended June 30): | Metric | 2025 (millions) | 2024 (millions) | Percentage Change | | :-------------------------------- | :-------------- | :-------------- | :---------------- | | Revenues less transaction-based expenses | $2,543 | $2,277 | 11.7% | | Operating income | $1,115 | $833 | 33.8% | | Net income attributable to Nasdaq | $847 | $456 | 85.5% | | Diluted earnings per share | $1.46 | $0.79 | 85.4% | - Annualized Recurring Revenue (ARR) was $2,205 million as of June 30, 2025, up from $2,048 million in 2024[200] - Quarterly annualized SaaS revenues for Solutions (Capital Access Platforms and Financial Technology) were $790 million as of June 30, 2025, up from $717 million in 2024[204] Segment Operating Results All three segments—Capital Access Platforms, Financial Technology, and Market Services—contributed to overall revenue growth. Capital Access Platforms and Financial Technology showed strong ARR and subscription revenue growth, while Market Services benefited from higher trading volumes Total Revenues less Transaction-Based Expenses by Segment (Three Months Ended June 30): | Segment | 2025 (millions) | 2024 (millions) | Percentage Change | | :-------------------------- | :-------------- | :-------------- | :---------------- | | Capital Access Platforms | $527 | $481 | 9.8% | | Financial Technology | $464 | $420 | 10.3% | | Market Services, net | $306 | $250 | 22.4% | | Other revenues | $9 | $8 | 4.7% | | Total | $1,306 | $1,159 | 12.7% | Total Revenues less Transaction-Based Expenses by Segment (Six Months Ended June 30): | Segment | 2025 (millions) | 2024 (millions) | Percentage Change | | :-------------------------- | :-------------- | :-------------- | :---------------- | | Capital Access Platforms | $1,042 | $960 | 8.6% | | Financial Technology | $896 | $813 | 10.3% | | Market Services, net | $587 | $486 | 20.6% | | Other revenues | $18 | $18 | (0.7)% | | Total | $2,543 | $2,277 | 11.7% | Capital Access Platforms Capital Access Platforms revenues increased by 9.8% for Q2 2025 and 8.6% for YTD 2025, driven by growth across Data & Listing Services, Index, and Workflow & Insights, with ARR reaching $1,315 million Capital Access Platforms Revenues (in millions): | Period | 2025 | 2024 | Percentage Change | | :-------------------------- | :--- | :--- | :---------------- | | Three Months Ended June 30 | $527 | $481 | 9.8% | | Six Months Ended June 30 | $1,042 | $960 | 8.6% | - Annualized Recurring Revenue (ARR) for Capital Access Platforms was $1,315 million as of June 30, 2025, up from $1,226 million in 2024[210] Financial Technology Financial Technology revenues increased by 10.3% for both Q2 and YTD 2025, reflecting strong subscription revenue growth from new sales, price increases, and new clients across Financial Crime Management Technology, Regulatory Technology, and Capital Markets Technology Financial Technology Revenues (in millions): | Period | 2025 | 2024 | Percentage Change | | :-------------------------- | :--- | :--- | :---------------- | | Three Months Ended June 30 | $464 | $420 | 10.3% | | Six Months Ended June 30 | $896 | $813 | 10.3% | - Financial Crime Management Technology revenues increased 19.7% for Q2 2025 and 20.1% for YTD 2025, with ARR and quarterly annualized SaaS revenues reaching $308 million[218][219] - Regulatory Technology revenues increased 9.6% for Q2 2025 and 10.7% for YTD 2025, with ARR reaching $376 million[218][220] - Capital Markets Technology revenues increased 8.1% for Q2 2025 and 7.6% for YTD 2025, with ARR reaching $932 million[218][221] Market Services Market Services net revenues increased by 22.4% for Q2 2025 and 20.6% for YTD 2025, driven by higher U.S. Equity Derivative Trading, Cash Equity Trading, and U.S. Tape plans revenues, primarily due to increased industry trading volumes Total Market Services, net Revenues (in millions): | Period | 2025 | 2024 | Percentage Change | | :-------------------------- | :--- | :--- | :---------------- | | Three Months Ended June 30 | $306 | $250 | 22.4% | | Six Months Ended June 30 | $587 | $486 | 20.6% | - U.S. Equity Derivative Trading net revenues increased 26.6% for Q2 2025 and 22.3% for YTD 2025, driven by higher industry trading volumes[224] - Cash Equity Trading net revenues increased 21.3% for Q2 2025 and 20.7% for YTD 2025, due to higher U.S. and European industry trading volumes[227] - U.S. Tape plans revenues increased 18.6% for Q2 2025 and 18.2% for YTD 2025, due to usage volume, higher share, and industry-wide adjustments[231] Other Revenues Other revenues remained stable for both the three and six months ended June 30, 2025 and 2024, and include revenues related to the Nordic power futures business, which was divested in June 2025 - Other revenues were $9 million for the three months and $18 million for the six months ended June 30, 2025 and 2024[23][234] - These revenues include those related to the Nordic power futures business, which was divested in June 2025[234] Expenses Total operating expenses remained relatively flat for Q2 2025 but decreased for YTD 2025, primarily due to lower restructuring charges. Non-operating income saw positive impacts from divestitures and unconsolidated investees, while the effective tax rate significantly decreased due to specific tax benefits Operating Expenses Total operating expenses remained stable for Q2 2025 but decreased by 1.1% for YTD 2025, mainly due to significantly lower restructuring charges, partially offset by increases in compensation, technology, and marketing expenses Total Operating Expenses (in millions): | Period | 2025 | 2024 | Percentage Change | | :-------------------------- | :--- | :--- | :---------------- | | Three Months Ended June 30 | $738 | $736 | 0.3% | | Six Months Ended June 30 | $1,428 | $1,444 | (1.1)% | - Compensation and benefits expense increased 7.3% for Q2 2025 and 1.8% for YTD 2025, driven by increased headcount and higher incentive compensation[236] - Technology and communication infrastructure expense increased 14.9% for Q2 2025 and 15.4% for YTD 2025, due to increased investment in technology and cloud initiatives[239] - Restructuring charges decreased significantly by 83.6% for Q2 2025 and 82.3% for YTD 2025, primarily due to the completion of the divisional realignment program[244] - Merger and strategic initiatives expense increased 454.2% for Q2 2025 and 244.3% for YTD 2025, including Adenza integration costs and repayment of a termination fee[243] Non-Operating Income and Expenses Net interest expense decreased for both periods. Net gain on divestitures contributed positively, and net income from unconsolidated investees significantly increased due to higher industry volumes, leading to a reduction in total non-operating expense Net Interest Expense (in millions): | Period | 2025 | 2024 | Percentage Change | | :-------------------------- | :--- | :--- | :---------------- | | Three Months Ended June 30 | $(83) | $(96) | (14.3)% | | Six Months Ended June 30 | $(168) | $(199) | (15.4)% | - Net gain on divestitures was $39 million for both the three and six months ended June 30, 2025, related to the Nordic power futures and Nasdaq Risk Modelling for Catastrophes businesses[247][249] - Net income from unconsolidated investees increased 1,092.5% for Q2 2025 and 779.7% for YTD 2025, driven by higher income recognized from the equity method investment in OCC[247][250] Tax Matters The income tax provision decreased, and the effective tax rate significantly lowered for both the three and six months ended June 30, 2025, primarily due to a tax benefit related to former Adenza employees and an intra-group IP transfer Income Tax Provision (in millions): | Period | 2025 | 2024 | Percentage Change | | :-------------------------- | :--- | :--- | :---------------- | | Three Months Ended June 30 | $96 | $119 | (19.0)% | | Six Months Ended June 30 | $190 | $198 | (4.0)% | Effective Tax Rate: | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30 | 17.5% | 34.9% | | Six Months Ended June 30 | 18.3% | 30.3% | Non-GAAP Financial Measures Nasdaq provides non-GAAP net income attributable to Nasdaq and non-GAAP diluted earnings per share to offer greater transparency into ongoing operating performance by excluding certain non-recurring or non-operational items, showing a strong increase in both metrics for the periods presented - Non-GAAP diluted earnings per share increased to $0.85 for the three months ended June 30, 2025, from $0.69 in 2024 (23.2% increase)[256] - Non-GAAP diluted earnings per share increased to $1.64 for the six months ended June 30, 2025, from $1.32 in 2024 (24.2% increase)[256] - Non-GAAP net income attributable to Nasdaq increased to $492 million for the three months ended June 30, 2025, from $397 million in 2024 (23.9% increase)[256] - Non-GAAP net income attributable to Nasdaq increased to $949 million for the six months ended June 30, 2025, from $764 million in 2024 (24.2% increase)[256] - Adjustments to GAAP measures include amortization of acquired intangible assets, merger and strategic initiatives expense, restructuring charges, net gain on divestitures, net income from unconsolidated investees, legal and regulatory matters, and pension settlement charges[256][260] Liquidity and Capital Resources Nasdaq maintains a healthy liquidity position, primarily funded by operating activities and augmented by debt. The company prudently manages capital deployment, balancing internal investments, debt repayments, shareholder returns, and potential acquisitions. Net cash provided by operating activities increased significantly - Working capital decreased to $(305) million as of June 30, 2025, from $(116) million at December 31, 2024[261] - Cash and cash equivalents increased to $732 million as of June 30, 2025, from $592 million at December 31, 2024[261] - Net cash provided by operating activities increased by $419 million for the six months ended June 30, 2025, compared to the same period in 2024[269] - Cash and cash equivalents held outside the U.S. totaled $235 million as of June 30, 2025[263] - Regulatory capital requirements for Nasdaq Clearing, broker-dealer subsidiaries, Nordic and Baltic exchanges, and other businesses totaled $157 million, $1 million (with $25 million excess), $42 million, and $12 million, respectively, as of June 30, 2025[276][277][278][280] Equity and Dividends Nasdaq continues its share repurchase program with $1.5 billion remaining authorization and increased its quarterly cash dividend to $0.27 per share in Q2 2025, reflecting a commitment to shareholder returns - The remaining aggregate authorized amount under the existing share repurchase program was $1.5 billion as of June 30, 2025[111][315] Quarterly Cash Dividends Paid Per Common Share: | Quarter | 2025 | 2024 | | :------------ | :----- | :----- | | First quarter | $0.24 | $0.22 | | Second quarter | $0.27 | $0.24 | | Total | $0.51 | $0.46 | Debt Obligations Nasdaq reduced its total debt by repaying $400 million of 2025 Notes and repurchasing $279 million of other senior unsecured notes in Q1 2025. The weighted average interest rate on debt obligations was approximately 3.7% at June 30, 2025, and the company was in compliance with all debt covenants - Repaid $400 million of 2025 Notes and repurchased an aggregate principal amount of $279 million of 2028, 2034, and 2052 Notes in Q1 2025[285] - The weighted average interest rate on debt obligations was approximately 3.7% as of June 30, 2025[286] - Available liquidity from European credit facilities totaled $203 million as of June 30, 2025, none of which was utilized[286] - Nasdaq was in compliance with the covenants of all debt obligations as of June 30, 2025[287] Contractual Obligations and Contingent Commitments Nasdaq's material cash requirements for contractual and other obligations totaled $16.7 billion as of June 30, 2025, primarily comprising debt obligations, operating lease payments, and purchase obligations, with the majority due in 5+ years Material Cash Requirements for Contractual Obligations (as of June 30, 2025, in millions): | Obligation Type | Total | <1 year | 1-3 years | 3-5 years | 5+ years | | :-------------------------- | :---- | :------ | :-------- | :-------- | :------- | | Debt obligation by contractual maturity | $14,596 | $844 | $1,530 | $1,958 | $10,264 | | Operating lease obligations | $633 | $74 | $151 | $139 | $269 | | Purchase obligations | $1,489 | $141 | $217 | $247 | $884 | | Total | $16,718 | $1,059 | $1,898 | $2,344 | $11,417 | Off-Balance Sheet Arrangements Nasdaq's off-balance sheet arrangements include non-cash default fund contributions and margin deposits for clearing operations, as well as various guarantees, as detailed in Notes 14 and 17 - Off-balance sheet arrangements include non-cash default fund contributions and margin deposits received for clearing operations[293] - Other off-balance sheet arrangements include guarantees issued, credit facilities available, other guarantees, and routing brokerage activities[293] Item 3. Quantitative and Qualitative Disclosures About Market Risk Nasdaq manages interest rate, foreign currency, and credit risks through policies and hedging programs, using derivatives solely for hedging - Nasdaq is exposed to market risks including interest rate risk, foreign currency exchange rate risk, and credit risk[290] - Derivative instruments are used solely to hedge financial risks related to financial positions or risks incurred during normal business operations, not for speculative purposes[292] Interest Rate Risk Nasdaq's interest rate risk primarily stems from its financial investments and debt obligations. All outstanding debt is fixed-rate, but variable rates apply to the revolving credit facility and commercial paper program, though no borrowings were outstanding as of June 30, 2025 - All outstanding debt obligations are fixed-rate obligations[294][296] - Variable interest rates apply to borrowings under the 2022 Revolving Credit Facility and commercial paper program, with no outstanding borrowings as of June 30, 2025[296] - A hypothetical 100 basis point increase in market interest rates would not have a material impact on Nasdaq's financial statements[295] Foreign Currency Exchange Rate Risk Nasdaq is exposed to foreign currency exchange rate risk from transactional revenues/expenses and the translation of foreign subsidiaries' net assets. The company uses foreign exchange contracts to hedge these exposures, with Euro, Swedish Krona, and Canadian Dollar being primary transactional exposures Transactional Exposure (Three Months Ended June 30, 2025): | Currency | % of Revenues less transaction-based expenses | % of Operating income | Impact of 10% adverse fluctuation on revenues less transaction-based expenses (millions) | Impact of 10% adverse fluctuation on operating income (millions) | | :--------------- | :------------------------------------------ | :-------------------- | :----------------------------------------------------------------------------------- | :------------------------------------------------------------- | | Euro | 7.4% | 10.6% | $(10) | $(6) | | Swedish Krona | 3.4% | (3.7)% | $(4) | $(2) | | Canadian Dollar | 0.6% | (7.0)% | $(1) | $(4) | | Other Foreign Currencies | 3.6% | (7.7)% | $(5) | $(4) | Net Assets in Foreign Currencies (as of June 30, 2025): | Currency | Net Assets (millions) | Impact of 10% Adverse Currency Fluctuation (millions) | | :--------------- | :-------------------- | :---------------------------------------------------- | | Swedish Krona | $3,238 | $(324) | | Canadian Dollar | $145 | $(15) | | Norwegian Krone | $134 | $(13) | | Australian Dollar | $97 | $(10) | | British Pound | $93 | $(9) | - Nasdaq uses foreign exchange contracts to hedge a portion of its forecasted foreign currency denominated revenues and expenses, and net investments in certain foreign subsidiaries[301][304] Credit Risk Nasdaq faces credit risk from customers, counterparties, and clearing agents, particularly through its clearing operations. This risk is mitigated by evaluating creditworthiness, engaging with high credit quality counterparties, and investing in high-quality sovereign debt and well-capitalized financial institutions - Nasdaq is exposed to credit risk from third parties, including customers, counterparties, and clearing agents, who may default on their obligations[305] - Credit risk is mitigated by evaluating counterparties, investing in highly rated European government debt securities, and placing funds with well-capitalized financial institutions[305][309] - Nasdaq Clearing manages credit, liquidity, and interest rate risks associated with clearing member cash deposits through strict investment policies and continuous monitoring[309][312] Item 4. Controls and Procedures Nasdaq's management concluded that its disclosure controls and procedures were effective as of June 30, 2025, and reported no material changes in internal control over financial reporting during the quarter Disclosure Controls and Procedures Nasdaq's management, including the CEO and CFO, evaluated and concluded that the company's disclosure controls and procedures were effective as of June 30, 2025 - Nasdaq's disclosure controls and procedures were effective as of June 30, 2025[310] Changes in Internal Control Over Financial Reporting There were no changes in Nasdaq's internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting - No material changes in Nasdaq's internal control over financial reporting occurred during the quarter ended June 30, 2025[311] Part II. OTHER INFORMATION Item 1. Legal Proceedings Nasdaq refers to Note 17 for legal proceedings, including a European Commission inspection, with no material financial impact expected - Refer to Note 17, 'Commitments, Contingencies and Guarantees,' for a description of legal proceedings[313] - The European Commission is conducting an inspection related to a potential competition law concern regarding the trading of Nordic financial derivatives[172] - Management believes that censures, fines, penalties, or other sanctions from ongoing examinations or inquiries will not have a material impact on Nasdaq's consolidated financial position or results of operations[174] Item 1A. Risk Factors Nasdaq directs readers to its most recent Form 10-K for a comprehensive discussion of risk factors that could materially and adversely affect its business, financial condition, and results of operations - Readers should carefully consider the risk factors discussed in Nasdaq's most recent Form 10-K, as these could materially and adversely affect the business[314] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Nasdaq details its common stock repurchases during Q2 2025, including those under its publicly announced share repurchase program and shares surrendered by employees for tax withholding obligations - Refer to Note 11, 'Nasdaq Stockholders' Equity,' for further discussion of the share repurchase program[315][319] Issuer Purchases of Equity Securities (Quarter Ended June 30, 2025): | Type of Purchase | Total Number of Shares Purchased | Average Price Paid Per Share | Maximum Dollar Value that May Yet Be Purchased (millions) | | :-------------------------- | :------------------------------- | :--------------------------- | :-------------------------------------------------------- | | Share repurchase program | 1,231,916 | $81.50 | $1,530 | | Employee transactions | 435,286 | $76.88 | N/A | Item 3. Defaults Upon Senior Securities Nasdaq reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[317] Item 4. Mine Safety Disclosures This item is not applicable to Nasdaq - Mine Safety Disclosures are not applicable to Nasdaq[318] Item 5. Other Information During the three months ended June 30, 2025, none of Nasdaq's directors or officers adopted, terminated, or modified any Rule 10b5-1 trading arrangements - No directors or officers adopted, terminated, or modified a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2025[320] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including various corporate policies, award certificates, certifications, and iXBRL financial data - Exhibits include the Board Compensation Policy, Form of Nasdaq Restricted Stock Unit Award Certificate, Form of Nasdaq Three-Year Performance Share Unit Agreement, CEO/CFO Certifications, and iXBRL formatted financial data[321] SIGNATURES The Quarterly Report on Form 10-Q was duly signed on July 25, 2025, by Nasdaq's Chief Executive Officer, Adena T. Friedman, and Executive Vice President and Chief Financial Officer, Sarah Youngwood - The report was signed by Adena T. Friedman, Chief Executive Officer, and Sarah Youngwood, Executive Vice President and Chief Financial Officer, on July 25, 2025[323]