NASDAQ, INC. (NDAQ) FY 2021 MD&A

Item 7. Management's Discussion And Analysis Of Financial Condition And Results Of Operations

The following discussion and analysis of the financial condition and results of operations of Nasdaq should be read in conjunction with our consolidated financial statements and related notes included in this Form 10-K, as well as the discussion under “Item 1A. Risk Factors.” For further discussion of our growth strategy, products and services, and competitive strengths, see “Item 1. Business.” Unless stated otherwise, the comparisons presented in this discussion and analysis refer to the year-over-year comparison of changes in our financial condition and results of operations as of and for the fiscal years ended December 31, 2021 and December 31, 2020. Discussion of fiscal year 2020 items and the year-over year comparison of changes in our financial condition and results of operations as of and for the fiscal years ended December 31, 2020 and December 31, 2019 can be found in Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which was previously filed with the SEC on February 23, 2021.

Business Segments

We manage, operate and provide our products and services in four business segments: Market Technology, Investment Intelligence, Corporate Platforms and Market Services. See Note 1, “Organization and Nature of Operations,” and Note 19, “Business Segments,” to the consolidated financial statements for further discussion of our reportable segments and geographic data, as well as how management allocates resources, assesses performance and manages these businesses as four separate segments. See “Part I, Item 1. Business” for additional discussion on recent developments and highlights.

Financial Summary

The following table summarizes our financial performance for the year ended December 31, 2021 when compared to the same period in 2020 and for the year ended December 31, 2020 when compared to the same period in 2019. The comparability of our results of operations between reported periods is impacted by the acquisition of Verafin in February 2021 and the divestiture of our U.S. Fixed Income business, which was part of our FICC business within our Market Services segment in June 2021. See “2021 Divestiture,” and “2021 Acquisition,” of Note 4, “Acquisitions and Divestiture,” to the consolidated financial statements for further discussion. For a detailed discussion of our results of operations, see “Segment Operating Results” below.

In countries with currencies other than the U.S. dollar, revenues and expenses are translated using monthly average exchange rates. Impacts on our revenues less transaction-based expenses and operating income associated with fluctuations in foreign currency are discussed in more detail under “Item 7A. Quantitative and Qualitative Disclosures about Market Risk.”

Nasdaq's Operating Results

The following chart summarizes our ARR (in millions):

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ARR for a given period is the annualized revenue derived from subscription contracts with a defined contract value. This excludes contracts that are not recurring, are one-time in nature, or where the contract value fluctuates based on defined metrics. ARR is currently one of our key performance metrics to assess the health and trajectory of our recurring business. ARR does not have any standardized definition and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.

The ARR chart includes:

The following chart summarizes our quarterly annualized SaaS revenues for our Solutions Segments, which is comprised of Market Technology, Investment Intelligence and Corporate Platforms, for the fourth quarter of 2021, 2020 and 2019 (in millions):

Segment Operating Results

The following table presents our revenues by segment, transaction-based expenses for our Market Services segment and total revenues less transaction-based expenses:

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The following charts present our Market Technology, Investment Intelligence, Corporate Platforms and Market Services segments as a percentage of our total revenues, less transaction-based expenses, of $3,420 million for the year ended December 31, 2021, $2,903 million for the year ended December 31, 2020 and $2,535 million for the year ended December 31, 2019.

Percentage of Revenues Less Transaction-based Expenses by Segment for the:

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MARKET TECHNOLOGY

The following tables present revenues and key drivers from our Market Technology segment:

In the table above, order intake is the total contract value of orders signed during the period, excluding Verafin. ARR and SaaS revenues include Verafin.

Anti Financial Crime Technology Revenues

Anti-financial crime technology revenues increased in 2021 compared with 2020 primarily due to the inclusion of revenues from our acquisition of Verafin and continued growth in surveillance solutions.

Marketplace Infrastructure Technology Revenues

Marketplace infrastructure technology revenues decreased in 2021 compared with 2020 primarily due to lower professional services revenues reflecting both an elevated prior year comparison period as well as capacity constraints that pandemic-related logistical challenges imposed on installation and change request projects as well as the completion of a significant long-term contract, partially offset by an increase in SaaS revenues.

INVESTMENT INTELLIGENCE

The following tables present revenues and key drivers from our Investment Intelligence segment:

Market Data Revenues

Market data revenues increased in 2021 compared with 2020 primarily due to an increase in proprietary data revenues from new sales primarily outside the U.S., partially offset by lower U.S. shared tape plan revenues.

Index Revenues

Index revenues increased in 2021 compared with 2020 primarily due to higher licensing revenues from higher average AUM in ETPs linked to Nasdaq indexes and higher licensing revenues from futures trading linked to the Nasdaq-100 Index.

Analytics Revenues

Analytics revenues increased in 2021 compared with 2020 primarily due to the growth in our eVestment and Solovis products driven by new sales, strong retention, and higher average revenue per client from expanded offerings.

CORPORATE PLATFORMS

The following tables present revenues and key drivers from our Corporate Platforms segment:

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In the table above:

•The Nasdaq Stock Market new listings include IPOs, including issuers that switched from other listing venues and separately listed ETPs. For the years ended December 31, 2021, 2020 and 2019, IPOs included 433, 132 and 43 SPACs, respectively.

•Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic 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 listed companies on The Nasdaq Stock Market for the years ended December 31, 2021, 2020 and 2019 included 441, 412 and 412 ETPs, respectively.

•Number of total listed companies on the exchanges that comprise Nasdaq Nordic and Nasdaq Baltic represents companies listed on these exchanges and companies on the alternative markets of Nasdaq First North.

Listing Services Revenues

Listing services revenues increased in 2021 compared with 2020 primarily due to an increase in the overall number of listed companies.

IR & ESG Services Revenues

IR & ESG Services revenues increased in 2021 compared with 2020 primarily due to higher adoption of our investor relations intelligence products as well as new ESG solutions.

MARKET SERVICES

Equity Derivative Trading and Clearing Revenues

The following tables present total revenues, transaction-based expenses, and total revenues less transaction-based expenses as well as key drivers from our Equity Derivative Trading and Clearing business:

In the table above, brokerage, clearance and exchange fees includes Section 31 fees of $32 million in 2021, $69 million in 2020 and $43 million in 2019. Section 31 fees are recorded as equity derivative trading and clearing revenues with a corresponding amount recorded in transaction-based expenses.

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

Equity derivative trading and clearing revenues and equity derivative trading and clearing revenues less transaction-based expenses increased in 2021 compared with 2020 primarily due to higher U.S. industry trading volumes, partially offset by lower overall U.S. matched market share executed on Nasdaq's exchanges and a lower capture rate. Also partially offsetting the increase in equity derivative trading and clearing revenues was lower Section 31 pass-through fee revenue.

Section 31 fees are recorded as equity derivative trading and clearing revenues with a corresponding amount recorded as brokerage, clearance and exchange fees in the Consolidated Statements of Income. In the U.S., we are assessed these fees from the SEC and pass them through to our customers in the form of incremental fees. Pass-through fees can increase or decrease due to rate changes by the SEC, our percentage of the overall industry volumes processed on our systems, and differences in actual dollar value of shares traded. Since the amount recorded in revenues is equal to the amount recorded as brokerage, clearance and exchange fees, there is no impact on our revenues less transaction-based expenses. Section 31 fees decreased in 2021 compared with 2020 due to lower average SEC fee rates, partially offset by higher dollar value traded on Nasdaq's exchanges.

Transaction rebates, in which we credit a portion of the per share execution charge to the market participant, increased in 2021 compared with 2020. The increase in 2021 was primarily due to higher U.S. industry trading volumes, partially offset by lower overall U.S. matched market share executed on Nasdaq's exchanges and a lower rebate capture rate.

Cash Equity Trading Revenues

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

In the table above, brokerage, clearance and exchange fees includes Section 31 fees of $228 million in 2021, $586 million in 2020 and $337 million in 2019. Section 31 fees are recorded as cash equity trading revenues with a corresponding amount recorded in transaction-based expenses.

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

Cash equity trading revenues decreased in 2021 compared with 2020 primarily due to lower Section 31 pass-through fee revenue and lower overall U.S. matched market share executed on Nasdaq's exchanges, partially offset by higher U.S. industry trading volumes, higher U.S. gross capture rates, higher European value traded and a favorable impact from changes in foreign exchange rates.

Cash equity trading revenues less transaction-based expenses increased in 2021 compared with 2020 primarily due to higher U.S. net capture rates, higher U.S. industry trading volumes, higher European value traded and a favorable impact from changes in foreign exchange rates, partially offset by lower overall U.S. matched market share executed on Nasdaq's exchanges.

Similar to equity derivative trading and clearing, in the U.S. we record Section 31 fees as cash equity trading revenues with a corresponding amount recorded as brokerage, clearance and exchange fees in the Consolidated Statements of Income. We are assessed these fees from the SEC and pass them through to our customers in the form of incremental fees. Since the amount recorded as revenues is equal to the amount recorded as brokerage, clearance and exchange fees, there is no impact on our revenues less transaction-based expenses. Section 31 fees decreased in 2021 compared with 2020 primarily due to lower average SEC fee rates.

Transaction rebates decreased 2021 compared with 2020. For The Nasdaq Stock Market and Nasdaq PSX, we credit a portion of the per share execution charge to the market participant that provides the liquidity, and for Nasdaq BX, we credit a portion of the per share execution charge to the market participant that takes the liquidity. The decrease was primarily due to lower overall U.S. matched market share executed on Nasdaq's exchanges and a lower rebate capture rate, partially offset by higher U.S. industry trading volumes.

FICC Revenues

The following table present revenues from our FICC business:

FICC revenues increased in 2021 compared with 2020 primarily due to higher European products revenues and a positive impact from foreign exchange rates.

Trade Management Services Revenues

The following tables present revenues and key drivers from our Trade Management Services business:

Trade management services revenues increased in 2021 compared with 2020 primarily due to increased demand for connectivity and infrastructure services.

OTHER REVENUES

Other revenues include the revenues associated with our U.S. Fixed Income business, which was sold in June 2021. Prior to the sale date, these revenues were included in our Market Services and Investment Intelligence segments. See “2021 Divestiture,” of Note 4,“Acquisitions and Divestiture,” to the consolidated financial statements for further discussion of this divestiture. Additionally, other revenues include revenues associated with the NPM business which we contributed in July 2021 to a standalone, independent company, of which we own the largest minority interest, together with a consortium of third party financial institutions. Prior to July 2021, these revenues were included in our Corporate Platforms segment.

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EXPENSES

Operating Expenses

The following tables present our operating expenses:

The increase in compensation and benefits expense in 2021 compared with 2020 was primarily driven by higher performance-linked compensation expense, our continued investment to drive growth, an increase in headcount as a result of our acquisition of Verafin and an unfavorable impact from foreign exchange rates.

Headcount increased to 5,814 employees as of December 31, 2021 from 4,830 as of December 31, 2020 primarily due to our recent acquisition of Verafin.

Professional and contract services expense increased in 2021 compared with 2020 primarily due to an increase in consulting costs.

Computer operations and data communications expense increased in 2021 compared with 2020 primarily due to our acquisition of Verafin and higher hardware and software maintenance costs due to increased cloud storage costs.

Occupancy expense increased in 2021 compared with 2020 due to our acquisition of Verafin and higher data center costs.

General, administrative and other expense decreased in 2021 compared with 2020 primarily due to charitable donations made to the Nasdaq Foundation, COVID-19 response and relief efforts and social justice charities in 2020, and a reserve recorded for a loss on a Market Technology implementation project in 2020.

Marketing and advertising expense increased in 2021 compared with 2020 primarily due to an increase in marketing commitments primarily driven by the increase in new listings.

Depreciation and amortization expense increased in 2021 compared with 2020 primarily due to additional expense for acquired intangible assets related to our acquisition of Verafin.

Regulatory expense increased in 2021 compared with 2020 primarily due to a charge associated with an administrative fine issued by the SFSA. See “Nasdaq Commodities Clearing Default,” of Note 15, “Clearing Operations,” to the consolidated financial statements for further discussion of the SFSA administrative fine.

Merger and strategic initiatives expense increased in 2021 compared with 2020 primarily due to the acquisition of Verafin. 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.

See Note 20, “Restructuring Charges,” to the consolidated financial statements for further discussion of our 2019 restructuring plan and charges associated with this plan.

Non-operating Income and Expenses

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

____________

N/M    Not meaningful.

Interest income decreased in 2021 compared with 2020 primarily due to a decrease in interest rates and lower average cash and cash equivalents balance.

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The following table presents our interest expense:

Interest expense increased in 2021 compared with 2020 primarily due to new issuances of senior notes in December 2020 and commercial paper issuances in the first quarter of 2021 to fund our acquisition of Verafin. See “2021 Acquisition,” of Note 4, “Acquisitions and Divestiture,” to the consolidated financial statements for further discussion of the acquisition of Verafin. See Note 9, “Debt Obligations,” to the consolidated financial statements for further discussion of our debt obligations.

The net gain on divestiture of businesses in 2021 relates to the sale of our U.S. Fixed Income business, which was part of our FICC business within our Market Services segment. We recognized a pre-tax gain on the sale of $84 million, net of disposal costs. See “2021 Divestiture,” of Note 4, “Acquisitions and Divestiture,” to the consolidated financial statements for further discussion.

Other income increased in 2021 compared with 2020 primarily due to gains from sales of strategic investments entered into through our corporate venture program.

Net income from unconsolidated investees decreased in the 2021 compared with 2020 primarily due to a decrease in income recognized from our equity method investment in OCC. See “Equity Method Investments,” of Note 6, “Investments,” to the consolidated financial statements for further discussion.

Tax Matters

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

For further discussion of our tax matters, see Note 17, “Income Taxes,” to the consolidated financial statements.

NON-GAAP FINANCIAL MEASURES

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

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

We understand that analysts and investors regularly rely on non-GAAP financial measures, such as non-GAAP net income attributable to Nasdaq and non-GAAP diluted earnings per share, to assess operating performance. We use non-GAAP net income attributable to Nasdaq and non-GAAP diluted earnings per share because they highlight trends more clearly in our business that may not otherwise be apparent when relying solely on U.S. GAAP financial measures, since these measures eliminate from our results specific financial items that have less bearing on our ongoing operating performance. Non-GAAP net income attributable to Nasdaq for the periods presented below is calculated by adjusting for the following items:

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

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useful representation of our businesses’ ongoing activity in each period.

•Merger and strategic initiatives expense: We have pursued various strategic initiatives and completed acquisitions and divestitures in recent years that have resulted in expenses which would not have otherwise been incurred. These expenses generally include integration costs, as well as legal, due diligence and other third party transaction costs. The frequency and the amount of such expenses vary significantly based on the size, timing and complexity of the transaction. Accordingly, we exclude these costs for purposes of calculating non-GAAP measures, which provide a more meaningful analysis of Nasdaq’s ongoing operating performance or comparisons in Nasdaq’s performance between periods.

•Restructuring charges: We initiated the transition of certain technology platforms to advance our strategic opportunities as a technology and analytics provider and continue the re-alignment of certain business areas. See Note 20, “Restructuring Charges,” to the consolidated financial statements for further discussion of our 2019 restructuring plan, which was completed in June 2021. Charges associated with this plan represented a fundamental shift in our strategy and technology as well as executive re-alignment and were 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.

•Net income from unconsolidated investee: See “Equity Method Investments,” of Note 6, “Investments,” to the consolidated financial statements for further discussion. Our income on our investment in OCC may vary significantly compared to prior periods due to the changes in OCC's capital management policy. Accordingly, we will exclude this income from current and prior periods for purposes of calculating non-GAAP measures which provide a more meaningful analysis of Nasdaq’s ongoing operating performance or comparisons in Nasdaq’s performance between periods.

•Other significant items: We have excluded certain other charges or gains, including certain tax items, that are the result of other non-comparable events to measure operating performance. We believe the exclusion of such amounts allows management and investors to better understand the ongoing financial results of Nasdaq. Other significant items include:

•for the year ended December 31, 2021 a charge related to an administrative fine imposed by the SFSA associated with the default that occurred in 2018, see “Nasdaq Commodities Clearing Default,” of Note 15, “Clearing Operations,” to the consolidated financial statements for further discussion, and for the year ended December 31, 2020, the reversal of a $6 million regulatory fine issued by the SFSA. Both charges have been included in regulatory expense in our Consolidated Statements of Income;

•for the year ended December 31, 2020, a provision for notes receivable associated with the funding of technology development for the CAT included in general, administrative and other expense in our Consolidated Statements of Income;

•for the years ended December 31, 2021 and 2020, a charge on extinguishment of debt which is included in general, administrative and other expense in our Consolidated Statements of Income;

•for the year ended December 31, 2021, a net gain on divestiture of business, which represents our pre-tax net gain of $84 million on the sale of our U.S. Fixed Income business;

•for the year ended December 31, 2020, charitable donations made to the Nasdaq Foundation, COVID-19 response and relief efforts, and social justice charities included in general, administrative and other expense in our Consolidated Statements of Income; and

•for the year ended December 31, 2021 gains from strategic investments entered into through our corporate venture program included in other income in our Consolidated Statements of Income.

•Significant tax items: The non-GAAP adjustment to the income tax provision for the years ended December 31, 2021 and 2020 includes the tax impact of each non-GAAP adjustment. In addition, for year ended December 31, 2021, the non-GAAP adjustment to the income tax provision includes return-to-provision adjustments and prior period tax benefits and for the year ended December 31, 2020, a tax benefit on compensation related deductions determined to be allowable and excess tax benefit related to employee share-based compensation to reflect the recognition of the income tax effects of share-based awards when awards vest or are settled. Beginning with the quarter ended March 31, 2021, such excess tax benefits are no longer included as a non-GAAP adjustment as they do not have a material impact on period over period comparison.

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The following table presents reconciliations between U.S. GAAP net income attributable to Nasdaq and diluted earnings per share and non-GAAP net income attributable to Nasdaq and diluted earnings per share:

LIQUIDITY AND CAPITAL RESOURCES

Historically, we have funded our operating activities and met our commitments through cash generated by operations, augmented by the periodic issuance of our common stock and debt. Currently, our cost and availability of funding remain healthy.

As of December 31, 2021, our sources and uses of cash were not materially impacted by COVID-19 and we have not identified any liquidity deficiencies as a result of the ongoing impact of the COVID-19 pandemic.

We will continue to closely monitor and manage our liquidity and capital resources. In addition, we continue to prudently assess our capital deployment strategy through balancing acquisitions, internal investments, debt repayments, and shareholder return activity, including share repurchases and dividends.

In the near term, we expect that our operations and the availability under our revolving credit facility and commercial paper program will provide sufficient cash to fund our operating expenses, capital expenditures, debt repayments, any share repurchases, and any dividends.

In April 2021, we filed a universal shelf registration statement on Form S-3ASR (Automatic Shelf Registration) with the SEC to have the ability to sell various types of securities including debt securities, common stock, preferred stock, depository receipts, warrants, subscription rights, purchase contracts and purchase units. The specific terms of any securities to be sold will be described in supplemental filings with the SEC. The registration statement will expire in April 2024.

In July 2021, we issued the 2033 Notes and primarily used the net proceeds from the sale of the 2033 Notes to redeem the 2023 Notes. See “2033 Notes,” and “Early Extinguishment of 2023 Notes,” of Note 9, “Debt Obligations,” to the consolidated financial statements for further discussion.

The value of various assets and liabilities, including cash and cash equivalents, receivables, accounts payable and accrued expenses, the current portion of long-term debt, and commercial paper, can fluctuate from month to month. Working capital (calculated as current assets less current liabilities) was $(449) million as of December 31, 2021, compared with $2,736 million as of December 31, 2020, a decrease of $3,185 million. The decrease was primarily due to a decrease in cash and cash equivalents, mainly due to the utilization of cash to partially fund the acquisition of Verafin, increases in short-term debt and deferred revenue, partially offset by a decrease in Section 31 fees payable and an increase in other current assets.

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

•    deterioration of our revenues in any of our business segments;

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•    changes in regulatory and working capital requirements; and

•an increase in our expenses.

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

•    operating covenants contained in our credit facilities that limit our total borrowing capacity;

•    credit rating downgrades, which could limit our access to additional debt;

•    a significant decrease in the market price of our common stock;

•    volatility or disruption in the public debt and equity markets; and

•    the impact of the COVID-19 pandemic on our business.

The following sections discuss the effects of changes in our financial assets, debt obligations, regulatory capital requirements, and cash flows on our liquidity and capital resources.

Financial Assets

The following table summarizes our financial assets:

Cash and Cash Equivalents

Cash and cash equivalents includes all non-restricted cash in banks and highly liquid investments with original maturities of 90 days or less at the time of purchase. The balance retained in cash and cash equivalents is a function of anticipated or possible short-term cash needs, prevailing interest rates, our investment policy, and alternative investment choices. As of December 31, 2021, our cash and cash equivalents of $393 million were primarily invested in bank deposits and money market funds. In the long-term, we may use both internally generated funds and external sources to satisfy our debt obligations and other long-term liabilities. Cash and cash equivalents as of December 31, 2021 decreased $2,352 million from December 31, 2020, primarily due to:

•our acquisition of Verafin, net of cash and cash equivalents acquired;

•repayment of borrowings under our credit commitment and debt obligations;

•the ASR agreement;

•other repurchases of our common stock;

•cash dividends paid on our common stock;

•purchases of property and equipment;

•other investing activities;

•payments related to employee shares withheld for taxes;

•payment of debt extinguishment cost, partially offset by;

•net cash provided by operating activities;

•proceeds from issuances of long-term debt, net of issuance costs and utilization of credit commitment;

•proceeds from commercial paper, net; and

•proceeds from divestiture of businesses, net of cash divested.

See “Cash Flow Analysis” below for further discussion.

Repatriation of Cash

Our cash and cash equivalents held outside of the U.S. in various foreign subsidiaries totaled $266 million as of December 31, 2021 and $237 million as of December 31, 2020. The remaining balance held in the U.S. totaled $127 million as of December 31, 2021 and $2,508 million as of December 31, 2020.

Unremitted earnings of certain subsidiaries outside of the U.S. are used to finance our international operations and are considered to be indefinitely reinvested.

Share Repurchase Program

See “Share Repurchase Program,” of Note 12, “Nasdaq Stockholders’ Equity,” to the consolidated financial statements for further discussion of our share repurchase program.

ASR Agreements

See “ASR Agreements,” of Note 12, “Nasdaq Stockholders’ Equity,” to the consolidated financial statements for further discussion of our ASR agreements.

Cash Dividends on Common Stock

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

See “Cash Dividends on Common Stock,” of Note 12, “Nasdaq Stockholders’ Equity,” to the consolidated financial statements for further discussion of the dividends.

Financial Investments

Our financial investments totaled $208 million as of December 31, 2021 and $195 million as of December 31, 2020. Of these securities, $162 million as of December 31, 2021 and $175 million as of December 31, 2020 are assets primarily utilized to meet regulatory capital requirements, mainly for our clearing operations at Nasdaq Clearing. See Note 6, “Investments,” to the consolidated financial statements for further discussion.

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Debt Obligations

The following table summarizes our debt obligations by contractual maturity:

In the table above, the 2022 Notes were reclassified to short-term debt as of December 31, 2021.

In addition to the $1.25 billion revolving credit facility, we also have other credit facilities primarily to support our Nasdaq Clearing operations in Europe, as well as to provide a cash pool credit line for one subsidiary. These credit facilities, which are available in multiple currencies, totaled $212 million as of December 31, 2021 and $232 million as of December 31, 2020 in available liquidity, none of which was utilized.

As of December 31, 2021, we were in compliance with the covenants of all of our debt obligations.

See Note 9, “Debt Obligations,” to the consolidated financial statements for further discussion of our debt obligations.

Regulatory Capital Requirements

Clearing Operations Regulatory Capital Requirements

We are required to maintain minimum levels of regulatory capital for the clearing operations of Nasdaq Clearing. The level of regulatory capital required to be maintained is dependent upon many factors, including market conditions and creditworthiness of the counterparty. As of December 31, 2021, our required regulatory capital of $138 million was comprised of highly rated European government debt securities that are included in financial investments in the Consolidated Balance Sheets.

Broker-Dealer Net Capital Requirements

Our broker-dealer subsidiaries, Nasdaq Execution Services, NFSTX, LLC, and Nasdaq Capital Markets Advisory, are subject to regulatory requirements intended to ensure their general financial soundness and liquidity. These requirements obligate these subsidiaries to comply with minimum net capital requirements. As of December 31, 2021, the combined required minimum net capital totaled $1 million and the combined excess capital totaled $21 million, substantially all of which is held in cash and cash equivalents in the Consolidated Balance Sheets. The required minimum net capital is included in restricted cash and cash equivalents in the Consolidated Balance Sheets.

Nordic and Baltic Exchange Regulatory Capital Requirements

The entities that operate trading venues in the Nordic and Baltic countries are each subject to local regulations and are required to maintain regulatory capital intended to ensure their general financial soundness and liquidity. As of December 31, 2021, our required regulatory capital of $35 million was primarily invested in European government debt securities that are included in financial investments in the Consolidated Balance Sheets and cash, which is included in restricted cash and cash equivalents in the Consolidated Balance Sheets.

Other Capital Requirements

We operate several other businesses, which are subject to local regulation and are required to maintain certain levels of regulatory capital. As of December 31, 2021, other required regulatory capital was $8 million and was primarily included in restricted cash in the Consolidated Balance Sheets.

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Cash Flow Analysis

The following table summarizes the changes in cash flows:

We have adjusted prior period presentation of opening and ending amounts of cash, cash equivalents, and restricted cash and cash equivalents in our consolidated statements of cash flows to include restricted cash and cash equivalents related to the default funds and margin deposits. See Note 2, “Summary of Significant Accounting Policies,” to the consolidated financial statements for further discussion of this adjustment.

Net Cash Provided by Operating Activities

Net cash provided by operating activities primarily consists of net income adjusted for certain non-cash items such as: depreciation and amortization expense of property and equipment; amortization expense of acquired finite-lived intangible assets; expense associated with share-based compensation; deferred income taxes; debt extinguishment costs; net gain on divestiture of a business, and net income from unconsolidated investees.

Net cash provided by operating activities is also impacted by the effects of changes in operating assets and liabilities such as: accounts receivable and deferred revenue which are impacted by the timing of customer billings and related collections from our customers; accounts payable and accrued expenses due to timing of payments; accrued personnel costs, which are impacted by employee performance targets and the timing of payments related to employee bonus incentives; and Section 31 fees payable to the SEC, which is impacted by the timing of collections from customers and payments to the SEC.

Net cash provided by operating activities decreased $169 million for the year ended December 31, 2021 compared with 2020. The decrease was primarily driven by a cash payment of an acquisition-related tax obligation on behalf of Verafin of $221 million and a cash payment of $102 million, the release of which is subject to certain employment-related conditions over three years following the closing of the acquisition of Verafin, partially offset by higher net income. The remaining change was primarily due to other fluctuations in our working capital.

Net Cash Used in Investing Activities

Net cash used in investing activities for the year ended December 31, 2021 primarily related to $2,430 million of cash used for the acquisition of Verafin, net of cash and cash equivalents acquired of $221 million, which was utilized to satisfy an acquisition-related tax obligation on behalf of Verafin, $163 million of purchases of property and equipment, a net decrease in investments related to default funds and margin deposits $132 million, $31 million of net purchases of securities and other investing activities of $87 million, partially offset by proceeds from divestiture of businesses, net of cash divested $190 million.

Net cash used in investing activities for the year ended December 31, 2020 primarily related to $157 million of cash used for acquisitions, net of cash and cash equivalents acquired and $188 million of purchases of property and equipment, partially offset by $119 million of proceeds from the net sales of securities and a net increase in investments related to default funds and margin deposits of $109 million.

Net Cash Provided by (Used in) Financing Activities

Net cash provided by financing activities for the year ended December 31, 2021 primarily related to a net increase in default funds and margin deposits of $2,330 million, proceeds of $826 million from the issuances of long-term-debt and utilization of credit commitment and $420 million of proceeds from issuances of commercial paper, net, partially offset by repayment of borrowings under our credit commitment and debt obligations of $804 million, $475 million of repurchases of common stock pursuant to the ASR agreement, $468 million in other repurchases of common stock, $350 million of dividend payments to our shareholders and a $33 million payment for debt extinguishment costs.

Net cash provided by financing activities for the year ended December 31, 2020 primarily related to $3,807 million of proceeds from issuances of long-term debt and the utilization of our credit commitment and a net increase in default funds and margin deposits $527 million, partially offset by $1,468 million in repayments of borrowings under our credit commitment and debt obligations, $222 million in repurchases of common stock, $391 million of net repayments of commercial paper, $320 million of dividend payments to our shareholders and a $36 million payment for debt extinguishment costs.

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See Note 4, “Acquisitions and Divestiture,” to the consolidated financial statements for further discussion of our acquisitions and divestiture.

See Note 9, “Debt Obligations,” to the consolidated financial statements for further discussion of our debt obligations.

See “ASR Agreements,” “Share Repurchase Program,” and “Cash Dividends on Common Stock,” of Note 12, “Nasdaq Stockholders’ Equity,” to the consolidated financial statements for further discussion of our ASR agreement, share repurchase program and cash dividends paid on our common stock.

Contractual Obligations and Contingent Commitments

Nasdaq has contractual obligations to make future payments under debt obligations by contract maturity, operating lease payments, and other obligations. The following table summarizes material cash requirements for known contractual and other obligations as of December 31, 2021, and the estimated timing thereof.

In the table above:

•Debt obligations by contractual maturity include both principal and interest obligations. As of December 31, 2021, an interest rate of 2.4% was used to compute the amount of the contractual obligations for interest on the 2020 Credit Facility. All other debt obligations were primarily calculated on a 365-day basis at the contractual fixed rate multiplied by the aggregate principal amount as of December 31, 2021. See Note 9, “Debt Obligations,” to the consolidated financial statements for further discussion.

•Operating lease obligations represent our undiscounted operating lease liabilities as of December 31, 2021. See Note 16, “Leases,” to the consolidated financial statements for further discussion of our leases.

•Purchase obligations primarily represent minimum outstanding obligations due under software license agreements. The balance as of December 31, 2021 is primarily comprised of our multi-year AWS partnership contract, which replaces our previous shorter term contracts, including those with no minimum spend commitment, and is not expected to increase our overall spend footprint with AWS over the life of the contract, based on projected growth and expansion of our existing AWS-based solutions.

Off-Balance Sheet Arrangements

For discussion of off-balance sheet arrangements see:

•    Note 15, “Clearing Operations,” to the consolidated financial statements for further discussion of our non-cash default fund contributions and margin deposits received for clearing operations; and

•    Note 18, “Commitments, Contingencies and Guarantees,” to the consolidated financial statements for further discussion of:

◦Guarantees issued and credit facilities available;

◦Other guarantees;

◦Routing brokerage activities;

◦Legal and regulatory matters; and

◦Tax audits.