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Business Segments | 12 Months Ended
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Dec. 31, 2016
Segment Reporting [Abstract] |
Business Segments | Business Segments We manage, operate and provide our products and services in four business segments: Market Services, Corporate Services, Information Services and Market Technology. See Note 1, “Organization and Nature of Operations,” for further discussion of our reportable segments. Our management allocates resources, assesses performance and manages these businesses as four separate segments. We evaluate the performance of our segments based on several factors, of which the primary financial measure is operating income. Results of individual businesses are presented based on our management accounting practices and structure. The following table presents certain information regarding our operating segments for the years ended December 31, 2016, 2015 and 2014:
| Market Services |  | Corporate Services |  | Information Services |  | Market Technology |  | Corporate Items |  | Consolidated
| (in millions)
2016 |  |  |  |  |  |  |  |  |  |  |
Total revenues | $ | 2,255 |  |  | $ | 635 |  |  | $ | 540 |  |  | $ | 275 |  |  | $ | — |  |  | $ | 3,705 |
Transaction-based expenses | (1,428 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,428 | )
Revenues less transaction-based expenses | 827 |  |  | 635 |  |  | 540 |  |  | 275 |  |  | — |  |  | 2,277 |
Depreciation and amortization | 87 |  |  | 47 |  |  | 18 |  |  | 18 |  |  | — |  |  | 170 |
Operating income (loss) | 450 |  |  | 158 |  |  | 383 |  |  | 69 |  |  | (221 | ) |  | 839 |
Total assets | 8,626 |  |  | 1,263 |  |  | 2,439 |  |  | 559 |  |  | 1,263 |  |  | 14,150 |
Purchase of property and equipment | 62 |  |  | 37 |  |  | 8 |  |  | 27 |  |  | — |  |  | 134 |
2015 |  |  |  |  |  |  |  |  |  |  |
Total revenues | $ | 2,084 |  |  | $ | 562 |  |  | $ | 512 |  |  | $ | 245 |  |  | $ | — |  |  | $ | 3,403 |
Transaction-based expenses | (1,313 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,313 | )
Revenues less transaction-based expenses | 771 |  |  | 562 |  |  | 512 |  |  | 245 |  |  | — |  |  | 2,090 |
Depreciation and amortization | 64 |  |  | 42 |  |  | 14 |  |  | 18 |  |  | — |  |  | 138 |
Operating income (loss) | 413 |  |  | 140 |  |  | 365 |  |  | 58 |  |  | (256 | ) |  | 720 |
Total assets | 6,906 |  |  | 576 |  |  | 2,456 |  |  | 752 |  |  | 1,171 |  |  | 11,861 |
Purchase of property and equipment | 53 |  |  | 38 |  |  | 11 |  |  | 31 |  |  | — |  |  | 133 |
2014 |  |  |  |  |  |  |  |  |  |  |
Total revenues | $ | 2,229 |  |  | $ | 552 |  |  | $ | 473 |  |  | $ | 246 |  |  | $ | — |  |  | $ | 3,500 |
Transaction-based expenses | (1,433 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,433 | )
Revenues less transaction-based expenses | 796 |  |  | 552 |  |  | 473 |  |  | 246 |  |  | — |  |  | 2,067 |
Depreciation and amortization | 80 |  |  | 25 |  |  | 13 |  |  | 19 |  |  | — |  |  | 137 |
Operating income (loss) | 413 |  |  | 121 |  |  | 348 |  |  | 49 |  |  | (177 | ) |  | 754 |
Total assets | 7,437 |  |  | 747 |  |  | 2,296 |  |  | 599 |  |  | 992 |  |  | 12,071 |
Purchase of property and equipment | 50 |  |  | 43 |  |  | 12 |  |  | 35 |  |  | — |  |  | 140 |
Certain amounts are allocated to corporate items in our management reports based on the decision that those activities should not be used to evaluate the segment’s ongoing operating performance. The following items are allocated to corporate items for segment reporting purposes: 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 segments, and the relative operating performance of the segments between periods. Management does not consider intangible asset amortization expense for the purpose of evaluating the performance of our segments or their managers or when making decisions to allocate resources. Therefore, we believe performance measures excluding intangible asset amortization expense provide management with a more useful representation of our segment’s ongoing activity in each period. Restructuring charges: Restructuring charges are associated with our 2015 restructuring plan to improve performance, cut costs and reduce spending and are primarily related to (i) the rebranding of our company name from The NASDAQ OMX Group, Inc. to Nasdaq, Inc., (ii) severance and other termination benefits, (iii) costs to vacate duplicate facilities, and (iv) asset impairment charges. We do not allocate these restructuring costs because they do not contribute to a meaningful evaluation of a particular segment’s ongoing operating performance. Merger and strategic initiatives expense: We have pursued various strategic initiatives and completed a number of acquisitions in recent years which have resulted in expenses which would not have otherwise been incurred. These expenses 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 do not allocate these costs for purposes of disclosing segment results because they do not contribute to a meaningful evaluation of a particular segment’s ongoing operating performance. Other significant items: We have excluded certain other charges or gains that are the result of other non-comparable events to measure operating performance. For 2016, other significant items primarily included costs associated with the acceleration of previously granted equity awards due to the retirement of our former CEO, a regulatory fine received by our exchange in Stockholm and Nasdaq Clearing, and the release of a sublease loss reserve due to the early exit of a facility. For 2015, other significant items included the reversal of a VAT refund and for 2014 other significant items included loss on extinguishment of debt. We believe the exclusion of such amounts allows management and investors to better understand the financial results of Nasdaq. * * * * * * A summary of our corporate items are as follows:
| December 31,
| 2016 |  | 2015 |  | 2014
| (in millions)
Amortization expense of acquired intangible assets | $ | 82 |  |  | $ | 62 |  |  | $ | 69 |
Restructuring charges | 41 |  |  | 172 |  |  | — |
Merger and strategic initiatives expense | 76 |  |  | 10 |  |  | 81 |
Executive compensation | 12 |  |  | — |  |  | — |
Regulatory matter | 6 |  |  | — |  |  | — |
Sublease loss reserve | (1 | ) |  | — |  |  | 11 |
Reversal of VAT refund receivables | — |  |  | 12 |  |  | — |
Loss on extinguishment of debt | — |  |  | — |  |  | 11 |
Other charges | 5 |  |  | — |  |  | 5 |
Total | $ | 221 |  |  | $ | 256 |  |  | $ | 177 |
The change in total assets as shown in the table above at December 31, 2016 compared with 2015 and 2015 compared with 2014 is as follows: Total assets increased $2,289 million at December 31, 2016 compared with December 31, 2015 primarily due to new regulatory rules in 2016 that require all collateral pledged by members of our Nasdaq Clearing business to be recorded on the balance sheet and an increase in goodwill associated with our 2016 acquisitions, partially offset by a pre-tax, non-cash intangible asset impairment charge of $578 million to write off the full value of the eSpeed trade name. For further discussion of the impairment charge, see “Intangible Asset Impairment Charges,” of Note 5, “Goodwill and Acquired Intangible Assets.” Total assets decreased $210 million at December 31, 2015 compared with December 31, 2014 primarily due to a decrease in goodwill and intangible assets, net reflecting the impact of changes in foreign exchange rates and amortization. In addition, as discussed in “Intangible Asset Impairment Charges,” of Note 5, “Goodwill and Acquired Intangible Assets,” the decrease is also due to a $119 million pre-tax, non-cash indefinite-lived intangible asset impairment charge recorded in 2015. These decreases were partially offset by an increase in non-current deferred tax assets primarily due to the income tax benefits of net foreign currency translation losses which are recorded in accumulated other comprehensive loss within stockholders’ equity in the Consolidated Balance Sheets. For further discussion of our segments’ results, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Segment Operating Results.” Geographic Data The following table presents total revenues and property and equipment, net by geographic area for 2016, 2015 and 2014. Revenues are classified based upon the location of the customer. Property and equipment information is based on the physical location of the assets.
| Total Revenues |  | Property and Equipment, Net
| (in millions)
2016: |  |  |
United States | $ | 2,659 |  |  | $ | 244 |
All other countries | 1,046 |  |  | 118 |
Total | $ | 3,705 |  |  | $ | 362 |
2015: |  |  |
United States | $ | 2,408 |  |  | $ | 217 |
All other countries | 995 |  |  | 106 |
Total | $ | 3,403 |  |  | $ | 323 |
2014: |  |  |
United States | $ | 2,524 |  |  | $ | 198 |
All other countries | 976 |  |  | 94 |
Total | $ | 3,500 |  |  | $ | 292 |
Our property and equipment, net for all other countries primarily includes assets held in Sweden. No single customer accounted for 10.0% or more of our revenues in 2016, 2015 and 2014. Corporate Services and Market Technology Segments - Summary Financial Information Due to changes in our executive leadership and to better reflect how our chief operating decision maker views the businesses, Nasdaq realigned its segment reporting, as first applied in 2016, to integrate the Listing Services and Corporate Solutions businesses into a single Corporate Services segment. Market Technology is now a separate reportable segment. The table below presents certain recast historical financial information for these segments for the past eight quarters:
Corporate Services
| 2016 |  | 2015
| Revenues |  | Operating Income |  | Revenues |  | Operating Income
| (in millions)
First quarter | $ | 143 |  |  | $ | 34 |  |  | $ | 139 |  |  | $ | 32 |
Second quarter | 162 |  |  | 41 |  |  | 142 |  |  | 37 |
Third quarter | 162 |  |  | 42 |  |  | 138 |  |  | 36 |
Fourth quarter | 167 |  |  | 41 |  |  | 143 |  |  | 36 |
Market Technology
| 2016 |  | 2015
| Revenues |  | Operating Income |  | Revenues |  | Operating Income
| (in millions)
First quarter | $ | 57 |  |  | $ | 10 |  |  | $ | 55 |  |  | $ | 10 |
Second quarter | 69 |  |  | 17 |  |  | 59 |  |  | 11 |
Third quarter | 73 |  |  | 19 |  |  | 59 |  |  | 12 |
Fourth quarter | 77 |  |  | 23 |  |  | 71 |  |  | 23 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8981-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9038-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8971-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8595-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8984-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9031-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8538-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8864-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8924-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8906-108599 + Details
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