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. In early 2018, we realigned our businesses to better serve the needs of our corporate clients. As a result, beginning in the second quarter of 2018, our BWise internal audit, regulatory compliance management, and operational risk management software solutions are now offered as part of governance, risk & compliance products and services within our Corporate Solutions business. BWise was previously part of our Market Technology segment. We have restated prior periods to conform to the current year presentation.

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, 2018, 2017 and 2016:



	Market Services			Corporate Services		Information Services		Market Technology		Corporate Items			Consolidated
	(in millions)
Year Ended December 31, 2018
Total revenues	$	2,709		$	528	$	714	$	270	$	56		$	4,277
Transaction-based expenses	(1,751		)	—		—		—		—			(1,751		)
Revenues less transaction-based expenses	958			528		714		270		56			2,526
Depreciation and amortization	95			41		51		$	21	2			210
Operating income (loss)	544			163		460		34		(173		)	1,028
Total assets	10,299			734		3,352		467		848			15,700
Purchase of property and equipment	28			29		17		37		—			111
Year Ended December 31, 2017
Total revenues	$	2,418		$	501	$	588	$	247	$	194		$	3,948
Transaction-based expenses	(1,537		)	—		—		—		—			(1,537		)
Revenues less transaction-based expenses	881			501		588		247		194			2,411
Depreciation and amortization	95			44		26		14		9			188
Operating income (loss)	481			158		418		57		(123		)	991
Total assets	9,471			865		3,420		572		1,026			15,354
Purchase of property and equipment	59			41		10		34		—			144
Year Ended December 31, 2016
Total revenues	$	2,255		$	477	$	540	$	241	$	191		$	3,704
Transaction-based expenses	(1,428		)	—		—		—		—			(1,428		)
Revenues less transaction-based expenses	827			477		540		241		191			2,276
Depreciation and amortization	87			42		18		13		10			170
Operating income (loss)	450			130		383		73		(200		)	836
Total assets	8,626			1,263		2,439		497		586			13,411
Purchase of property and equipment	62			37		8		27		—			134

Certain amounts are allocated to corporate items in our management reports as we believe they do not contribute to a meaningful evaluation of a particular segment's ongoing operating performance. These items include the following:

2018 Divestiture: We have included in corporate items the revenues and expenses of the Public Relations Solutions and Digital Media Services businesses which were part of the Corporate Solutions business within our Corporate Services segment as these businesses were sold in April 2018. See “2018 Divestiture,” of Note 3, “Acquisitions and Divestiture,” for further discussion.

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 segments' ongoing activity in each period.

Merger and strategic initiatives expense: We have pursued various strategic initiatives and completed a divestiture and a number of acquisitions 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. The frequency and the amount of such expenses vary significantly based on the size, timing and complexity of the transaction.

Clearing Default: For the year ended December 31, 2018, we recorded $31 million in expense related to the clearing default. In September 2018, we recorded an $8 million loss relating to this default. In December 2018, we recorded a $23 million charge as a result of initiating a capital relief program. See “Nasdaq Commodities Clearing Default,” of Note 15, “Clearing Operations,” for further discussion of the default. We have excluded these charges as we believe they are non-recurring, as there has never been a loss due to member default in our clearinghouse, and they should be excluded when evaluating the ongoing operating performance of the Market Services segment. Any expenses associated with the enhancement of processes and procedures relating to our clearing business will be reflected within the Market Services segment.

Other significant items: We have included certain other charges or gains in corporate items, to the extent we believe they should be excluded when evaluating the ongoing operating performance of each individual segment. For 2018, other significant items primarily included charges related to uncertain positions pertaining to sales and use tax and VAT and certain litigation costs. For 2017, other significant items primarily included loss on extinguishment of debt. For 2016, other significant items primarily included restructuring charges of $41 million which were associated with our 2015 restructuring plan, a regulatory fine received by our Nordic exchanges and clearinghouse, accelerated expense for equity awards previously granted due to the retirement of the company’s former CEO, and the release of a sublease loss reserve due to the early exit of a facility. We believe the exclusion of such amounts allows management and investors to better understand the ongoing financial results of each segment.

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.

* * * * * *

A summary of our corporate items is as follows:



	Year Ended December 31,
	2018			2017			2016
	(in millions)
Revenues - divested businesses	$	56		$	194		$	191
Expenses:
Amortization expense of acquired intangible assets	109			92			82
Merger and strategic initiatives expense	21			44			76
Clearing default	31			—			—
Extinguishment of debt	—			10			—
Restructuring charges	—			—			41
Regulatory matter	—			—			6
Expenses - divested businesses	51			167			168
Executive compensation	—			—			12
Other	17			4			6
Total expenses	229			317			391
Operating loss	$	(173	)	$	(123	)	$	(200	)

Total assets increased $346 million as of December 31, 2018 compared with December 31, 2017 primarily due to an increase in default funds and margin deposits (with a corresponding increase in current liabilities), due to higher cash default fund contributions directly related to member exposure and an increase in margin level requirements as a result of the Nasdaq Commodities clearing default in September 2018. This increase was partially offset by a decrease in goodwill and intangible assets, net reflecting the impact of changes in foreign exchange rates and amortization of intangible assets. Total assets increased $2.0 billion as of December 31, 2017 compared with December 31, 2016 primarily due to an increase in default funds and margin deposits (with a corresponding increase in current liabilities), reflecting an increase in cash margin deposits pledged by members of our Nasdaq Clearing business due to an increase in clearing volume. Also contributing to the increase was an increase in goodwill and intangible assets associated with our 2017 and 2016 acquisitions.

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 2018, 2017 and 2016. Revenues are classified based upon the location of the customer. Property and equipment information is based on the physical location of the assets. On January 1, 2018, we adopted Topic 606 using the full retrospective method which required restatement of 2017 and 2016 financial statements.



	Total Revenues		Property and Equipment, Net
2018:	(in millions)
United States	$	3,379	$	224
All other countries	898		152
Total	$	4,277	$	376
2017:
United States	$	3,081	$	247
All other countries	867		153
Total	$	3,948	$	400
2016:
United States	$	2,679	$	244
All other countries	1,025		118
Total	$	3,704	$	362

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 2018, 2017 and 2016.