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