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Revenue Recognition | 9 Months Ended
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Sep. 30, 2019
Revenue from Contract with Customer [Abstract] |
Revenue Recognition | Revenue Recognition Substantially all of our revenues are considered to be revenues from contracts with customers. The related accounts receivable balances are recorded in our balance sheets as customer accounts receivable. We do not have obligations for warranties, returns or refunds to customers, other than the rebates discussed below, which are settled each period and therefore do not result in variable consideration. We do not have significant revenue recognized from performance obligations that were satisfied in prior periods, and we do not have any transaction price allocated to unsatisfied performance obligations other than in our deferred revenue. Deferred revenue represents our contract liabilities related to our annual, original and other listings revenues as well as certain data services, clearing services and other revenues. See Note 7 for our discussion of deferred revenue balances, activity, and expected timing of recognition. As permitted by U.S. GAAP, we have elected not to provide disclosures about transaction price allocated to unsatisfied performance obligations if contract durations are less than one year, or if we are not required to estimate the transaction price. For all of our contracts with customers, except for listings and certain data and clearing services, our performance obligations are short-term in nature and there is no significant variable consideration. See the bullets below for further descriptions of our revenue contracts. In addition, we have elected the practical expedient of excluding sales taxes from transaction prices. We have assessed the costs incurred to obtain or fulfill a contract with a customer and determined them to be immaterial. Certain judgments and estimates were used in the identification and timing of satisfaction of performance obligations and the related allocation of transaction price. We believe that these represent a faithful depiction of the transfer of services to our customers. Our primary revenue contract classifications are described below. These categories best represent those with similar economic characteristics of the nature, amount, timing and uncertainty of revenues and cash flows.
• | Transaction and clearing, net - Transaction and clearing revenues represent fees charged for the performance obligations of derivatives trading and clearing, cash, equity options and fixed income trading, as well as mortgage services. The derivatives trading and clearing fees contain two performance obligations: (1) trade execution/clearing novation and (2) risk management of open interest. While we allocate the transaction price between these two performance obligations, since they generally are satisfied almost simultaneously there is no significant deferral of revenue. Cash trading, equity options, mortgage services and fixed income fees contain one performance obligation related to each transaction which occurs instantaneously, and the revenue is recorded at the point in time of the transaction. Our transaction and clearing revenues are reported net of rebates, except for the NYSE transaction-based expenses. Rebates were $653 million and $615 million for the nine months ended September 30, 2019 and 2018, respectively, and $218 million and $183 million for the three months ended September 30, 2019 and 2018, respectively. Transaction and clearing fees can be variable based on trade volume discounts used in the determination of rebates, however virtually all volume discounts are calculated and recorded on a monthly basis. Transaction and clearing fees, as well as any volume discounts rebated to our customers, are calculated and billed monthly in accordance with our published fee schedules. We make liquidity payments to certain customers in our NYSE businesses and recognize those payments as a cost of revenue. In addition, we pay NYSE regulatory oversight fees to the SEC and collect equal amounts from our customers. These are also considered a cost of revenue, and both of these NYSE-related fees are included in transaction-based expenses. Transaction and clearing revenues and the related transaction-based expenses are all recognized in our Trading and Clearing segment. In certain of our revenue share arrangements with third parties we control the delivered contract; in these arrangements we are acting as a principal and the revenue is recorded gross.
• | Data services - Data service revenues represent the following:
◦ | Pricing and analytics services provide global securities evaluations, reference data, market indices, risk analytics, derivatives pricing and other information designed to meet our customers' portfolio management, trading, risk management, reporting and regulatory compliance needs.
◦ | Exchange data and feeds services provide real-time, historical and derived pricing data, order book and transaction information related to our trading venues, as well as data from a broad array of third-party trading venues and news feeds.
◦ | Desktops and connectivity services provide the connection to our exchanges, clearing houses and data centers and comprise hosting, colocation, infrastructure, technology-based information platforms, workstations and connectivity solutions through the ICE Global Network.
The nature and timing of each contract type for the data services above are similar in nature. Data services revenues are primarily subscription-based, billed monthly, quarterly or annually in advance and recognized ratably over time as our performance obligations of data delivery are met consistently throughout the period. Considering these contracts primarily consist of single performance obligations with fixed prices, there is no variable consideration and no need to allocate the transaction price. In certain of our data contracts, where third parties are involved, we arrange for the third party to transfer the services to our customers; in these arrangements we are acting as an agent and revenue is recorded net. All data services fees are included in our Data and Listings segment.
• | Listings - Listings revenues include original and annual listings fees, and other corporate action fees. Each distinct listing fee is allocated to multiple performance obligations including original and incremental listing and investor relations services, as well as a customer’s material right to renew the option to list on our exchanges. In performing this allocation, the standalone selling price of the listing services is based on the original and annual listing fees and the standalone selling price of the investor relations services is based on its market value. All listings fees are billed upfront and the identified performance obligations are satisfied over time. Revenue related to the investor relations performance obligation is recognized ratably over a two-year period, with the remaining revenue recognized ratably over time as customers continue to list on our exchanges, which is generally estimated to be over a period of up to nine years for NYSE and up to five years for NYSE Arca and NYSE American. Listings fees related to other corporate actions are considered contract modifications of our listing contracts and are recognized ratably over time as customers
continue to list on our exchanges, which is generally estimated to be a period of six years for NYSE and three years for NYSE Arca and NYSE American. All listings fees are recognized in our Data and Listings segment.
• | Other revenues - Other revenues primarily include interest income on certain clearing margin deposits, regulatory penalties and fines, fees for use of our facilities, regulatory fees charged to member organizations of our U.S. securities exchanges, designated market maker service fees, exchange membership fees and agricultural grading and certification fees. Generally, fees for other revenues contain one performance obligation. Because these contracts primarily consist of single performance obligations with fixed prices, there is no variable consideration and no need to allocate the transaction price. Services for other revenues are primarily satisfied at a point in time. Therefore, there is no need to allocate the fee and no deferral results as we have no further obligation to the customer at that time. Other revenues are recognized in our Trading and Clearing segment.
The following table depicts the disaggregation of our revenue according to business line and segment (in millions). Segment totals here are consistent with the segment totals in Note 15:
| Trading and Clearing Segment |  | Data and Listings Segment |  | Total Consolidated
Nine months ended September 30, 2019: |  |  |  |  |
Transaction and clearing, net | $ | 2,698 |  |  | $ | — |  |  | $ | 2,698 |
Data services | — |  |  | 1,652 |  |  | 1,652 |
Listings | — |  |  | 336 |  |  | 336 |
Other revenues | 194 |  |  | — |  |  | 194 |
Total revenues | 2,892 |  |  | 1,988 |  |  | 4,880 |
Transaction-based expenses | 976 |  |  | — |  |  | 976 |
Total revenues, less transaction-based expenses | $ | 1,916 |  |  | $ | 1,988 |  |  | $ | 3,904 |
Timing of Revenue Recognition |  |  |  |  |
Services transferred at a point in time | $ | 1,653 |  |  | $ | — |  |  | $ | 1,653 |
Services transferred over time | 263 |  |  | 1,988 |  |  | 2,251 |
Total revenues, less transaction-based expenses | $ | 1,916 |  |  | $ | 1,988 |  |  | $ | 3,904 |
| Trading and Clearing Segment |  | Data and Listings Segment |  | Total Consolidated
Nine months ended September 30, 2018: |  |  |  |  |
Transaction and clearing, net | $ | 2,522 |  |  | $ | — |  |  | $ | 2,522 |
Data services | — |  |  | 1,576 |  |  | 1,576 |
Listings | — |  |  | 332 |  |  | 332 |
Other revenues | 169 |  |  | — |  |  | 169 |
Total revenues | 2,691 |  |  | 1,908 |  |  | 4,599 |
Transaction-based expenses | 928 |  |  | — |  |  | 928 |
Total revenues, less transaction-based expenses | $ | 1,763 |  |  | $ | 1,908 |  |  | $ | 3,671 |
Timing of Revenue Recognition |  |  |  |  |
Services transferred at a point in time | $ | 1,507 |  |  | $ | — |  |  | $ | 1,507 |
Services transferred over time | 256 |  |  | 1,908 |  |  | 2,164 |
Total revenues, less transaction-based expenses | $ | 1,763 |  |  | $ | 1,908 |  |  | $ | 3,671 |
| Trading and Clearing Segment |  | Data and Listings Segment |  | Total Consolidated
Three months ended September 30, 2019: |  |  |  |  |
Transaction and clearing, net | $ | 929 |  |  | $ | — |  |  | $ | 929 |
Data services | — |  |  | 553 |  |  | 553 |
Listings | — |  |  | 114 |  |  | 114 |
Other revenues | 67 |  |  | — |  |  | 67 |
Total revenues | 996 |  |  | 667 |  |  | 1,663 |
Transaction-based expenses | 327 |  |  | — |  |  | 327 |
Total revenues, less transaction-based expenses | $ | 669 |  |  | $ | 667 |  |  | $ | 1,336 |
Timing of Revenue Recognition |  |  |  |  |
Services transferred at a point in time | $ | 578 |  |  | $ | — |  |  | $ | 578 |
Services transferred over time | 91 |  |  | 667 |  |  | 758 |
Total revenues, less transaction-based expenses | $ | 669 |  |  | $ | 667 |  |  | $ | 1,336 |
| Trading and Clearing Segment |  | Data and Listings Segment |  | Total Consolidated
Three months ended September 30, 2018: |  |  |  |  |
Transaction and clearing, net | $ | 760 |  |  | $ | — |  |  | $ | 760 |
Data services | — |  |  | 530 |  |  | 530 |
Listings | — |  |  | 112 |  |  | 112 |
Other revenues | 61 |  |  | — |  |  | 61 |
Total revenues | 821 |  |  | 642 |  |  | 1,463 |
Transaction-based expenses | 263 |  |  | — |  |  | 263 |
Total revenues, less transaction-based expenses | $ | 558 |  |  | $ | 642 |  |  | $ | 1,200 |
Timing of Revenue Recognition |  |  |  |  |
Services transferred at a point in time | $ | 477 |  |  | $ | — |  |  | $ | 477 |
Services transferred over time | 81 |  |  | 642 |  |  | 723 |
Total revenues, less transaction-based expenses | $ | 558 |  |  | $ | 642 |  |  | $ | 1,200 |
The Trading and Clearing segment revenues above include $188 million and $184 million for the nine months ended September 30, 2019 and 2018, respectively, and $66 million and $56 million for the three months ended September 30, 2019 and 2018, respectively, for services transferred over time related to risk management of open interest performance obligations. A majority of these performance obligations are performed over a short period of time of one month or less. Beginning in the second quarter of 2019, we have reflected amounts owed under certain third-party revenue share arrangements as technology and communication operating expenses rather than as had been previously recorded net within transaction and clearing revenues. These are included within our Trading and Clearing segment. Deferred Revenue Our contract liabilities, or deferred revenue, represent consideration received that is yet to be recognized as revenue. Total deferred revenue was $332 million as of September 30, 2019, including $247 million in current deferred revenue and $85 million in non-current deferred revenue. The changes in our deferred revenue during the nine months ended September 30, 2019 are as follows (in millions):
| Annual Listings Revenues |  | Original Listings Revenues |  | Other Listings Revenues |  | Data Services and Other Revenues |  | Total
Deferred revenue balance at December 31, 2018 | $ | — |  |  | $ | 25 |  |  | $ | 100 |  |  | $ | 92 |  |  | $ | 217 |
Additions | 387 |  |  | 11 |  |  | 30 |  |  | 300 |  |  | 728 |
Amortization | (289 | ) |  | (17 | ) |  | (30 | ) |  | (277 | ) |  | (613 | )
Deferred revenue balance at September 30, 2019 | $ | 98 |  |  | $ | 19 |  |  | $ | 100 |  |  | $ | 115 |  |  | $ | 332 |
The changes in our deferred revenue during the nine months ended September 30, 2018 are as follows (in millions):
| Annual Listings Revenues |  | Original Listings Revenues |  | Other Listings Revenues |  | Data Services and Other Revenues |  | Total
Deferred revenue balance at December 31, 2017 | $ | — |  |  | $ | 25 |  |  | $ | 98 |  |  | $ | 93 |  |  | $ | 216 |
Additions | 383 |  |  | 17 |  |  | 36 |  |  | 291 |  |  | 727 |
Amortization | (288 | ) |  | (17 | ) |  | (27 | ) |  | (272 | ) |  | (604 | )
Deferred revenue balance at September 30, 2018 | $ | 95 |  |  | $ | 25 |  |  | $ | 107 |  |  | $ | 112 |  |  | $ | 339 |
Included in the amortization recognized during the nine months ended September 30, 2019 is $94 million related to the deferred revenue balance as of January 1, 2019. Included in the amortization recognized for the nine months ended September 30, 2018 is $98 million related to the deferred revenue balance as of January 1, 2018. As of September 30, 2019, the remaining deferred revenue balance for original listings revenue, other listings revenue and data services and other revenues will be recognized over the period of time we satisfy our performance obligations as described in Note 5.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
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