The following discussion and analysis of the financial condition and results of operations of Nasdaq should be read in conjunction with our condensed consolidated financial statements and related notes included in this Form 10-Q. Impact of COVID-19 on Our Business We continue to closely monitor developments related to COVID-19 and to assess its impact on our business. COVID-19 has caused significant economic and financial turmoil both in theU.S. and around the world. We have implemented risk management and contingency plans and have taken preventive measures and other precautions to maintain normal business operations. As COVID-19 spread across the world, we moved quickly to transition our global workforce to a remote operating environment, through a combination of work-from-home and split teams for critical on-site employees. As ofJune 30, 2020 , the vast majority of our global team remain working from home. For the limited staff around the world who are performing critical on-site functions in our offices, we have deployed extra precautions to protect their safety. We are working to reopen certain offices in a deliberate manner. The majority of our re-opened offices are located in countries or, in certain cases, cities with favorable health data. We will monitor conditions, guidance from health officials, and local regulations in these locations and, if circumstances change, we may close these offices again if necessary in order to safeguard our employees and stakeholders. We have reiterated to our global workforce that, through at least the end of 2020, an employee's return to the office from remote work is entirely voluntary. During the second quarter of 2020, our operations have continued with minimal disruption. As ofJune 30, 2020 , COVID-19 did not have a significant negative impact on our business operations, employee availability, financial condition, liquidity or cash flows. As further discussed in Note 8, "Debt Obligations," to the condensed consolidated financial statements and Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources," given the market uncertainties posed by COVID-19 and related economic impacts, inMarch 2020 , we took actions to strengthen our liquidity and cash position and address refinancing risks and borrowed$799 million under the revolving credit commitment of the 2017 Credit Facility. InApril 2020 , we further enhanced the strength of our balance sheet and issued the 2050 Notes. We used the net proceeds from this offering to repay a portion of amounts previously borrowed under the 2017 Credit Facility, and inJune 2020 the remaining outstanding amount under the 2017 Credit Facility was repaid using cash on hand. Additionally, duringJune 2020 , we repaid all of our outstanding commercial paper borrowings. Although we have not experienced any significant negative impacts to our operations as a result of COVID-19, due to the continuing effect of the pandemic, particularly inthe United States , it is possible that the outbreak may impact our results of operations for the remainder of the year and possibly beyond as an economic downturn could adversely impact the demand for our services. The current, and potential, impact to each of our segments is discussed below. Market Services We believe that it is difficult to predict trading volumes from quarter to quarter. Trading volumes, particularly in equity and equity-linked derivatives, were unusually high during the second quarter of 2020. We believe that this increased volume was due to the implications of the pandemic and significant sector rotations in the market, such as increased demand for technology and healthcare. We continue to believe that the combination of continued global economic uncertainty, and the upcomingU.S. election, may lead to elevated volumes for our markets in the months ahead. However, there is no assurance that volumes will continue at this level during the remainder of 2020. Corporate Services In Listing Services, we experienced increased demand for IPOs in the second quarter of 2020 compared with the first quarter of 2020. We remain positive regarding our listed issuer base due to the increase in IPOs and the pipeline for new offerings, but we cannot predict investor demand for new IPOs for the remainder of the year, and we believe investor demand may be reduced in the period prior to theU.S. election due to macroeconomic uncertainties. In Corporate Solutions, we have seen increased demand for our investor relations advisory services, which assist our corporate clients in analyzing their investor bases and understanding buy-side priorities, as well as rising demand for our ESG solutions. However, we have experienced reduced demand from certain customers that have been significantly adversely affected by COVID-19, including our customers in the travel, retail, and energy sectors. We have observed that sales cycles with customer prospects are longer as a result of operating in a virtual environment. We continue to work with our affected customers regarding their payment obligations to ensure the long-term success of these customer relationships. Information Services In our Information Services segment, we continue to experience varied implications of the current environment on each of our businesses. Our Market Data business has demonstrated resilience and a stable performance, but is not completely immune when economic downturns are more protracted. 33 -------------------------------------------------------------------------------- Our Index business continues to demonstrate strong resilience and growth. This business has benefited from inflows into Nasdaq-licensed ETPs, continued growth in the volumes of Nasdaq-listed futures, and from the market rebound. In particular, we have observed strong net inflows to our flagship index, the Nasdaq 100. While this business is sensitive to reversals in exogenous market beta and futures volume trends, we believe that the second quarter's positive results may result in continued positive results for the remainder of the year. In our Investment Data & Analytics business, while growth in eVestment has been impacted by reduced customer demand, the addition of the Solovis offerings provides us with additional opportunities to expand our solutions and usage for our eVestment customers. Market Technology In our Market Technology segment, our large, diverse, and well-established customer base across market infrastructure operators and banks and brokers, with long-term contracts, has helped support this business during the current environment. During the second quarter of 2020, our technical support teams have continued to adapt to a remote work environment to support our customers. We have observed increased interest from customers in our next-generation technology, particularly the SaaS capabilities we have developed for our market infrastructure and surveillance products, which assist our customers with the challenges of scalability and flexibility concerns arising from the effects of COVID-19. However, implementation projects and new order intake levels have been affected and we continue to face short-term, logistical growth challenges for this business that may moderate the revenue growth of the Market Technology business in 2020. OurCommunity Initiatives The second quarter was marked not only by the widespread impact of the global COVID-19 health crisis, but also by the increased focus on inequality and social injustice in communities throughoutthe United States . We are committed to creating lasting, positive change within our company and the communities we serve. InJune 2020 , we announced actions to strengthen our continued commitment to diversity and inclusion. We pledged$3 million in cash donations to organizations serving underserved, minority communities in fighting the impact of the health crisis, and we increased our resources devoted to our internal programs, which include programs focused on diversity-oriented professional development, the employee experience, and talent acquisition, as we continue to foster a diverse and inclusive corporate culture. Additionally, we contributed$10 million to support theNasdaq Foundation and plan to annually fund theNasdaq Foundation with approximately one quarter of one percent of our operating profits beginning in 2021. 34
-------------------------------------------------------------------------------- Nasdaq's Operating ResultsKey Drivers The following table includes key drivers for our Market Services, Corporate Services, Information Services and Market Technology segments. In evaluating the performance of our business, our senior management closely evaluates these key drivers. Six Months Ended June Three Months Ended June 30, 30, 2020 2019 2020 2019 Market Services Equity Derivative Trading and ClearingU.S. equity options Total industry average daily volume (in millions) 26.6 17.3 26.0 17.3 Nasdaq PHLX matched market share 11.4 % 16.0 % 12.1 % 16.0 % The Nasdaq Options Market matched market share 10.4 % 8.9 % 10.5 % 9.1 % Nasdaq BX Options matched market share 0.2 % 0.2 % 0.2 % 0.3 % Nasdaq ISE Options matched market share 8.3 % 9.3 % 8.3 % 8.9 % Nasdaq GEMX Options matched market share 5.6 % 3.9 % 4.7 % 4.0 % Nasdaq MRX Options matched market share 0.5 % 0.2 % 0.5 % 0.2 % Total matched market share executed on Nasdaq's exchanges 36.4 % 38.5 % 36.3 % 38.5 %
Nasdaq Nordic and Nasdaq Baltic options and futures Total average daily volume of options and futures contracts(1)
292,551 384,692 377,201 368,561 Cash Equity Trading TotalU.S. -listed securities Total industry average daily share volume (in billions) 12.35 6.93 11.67 7.22 Matched share volume (in billions) 142.7 87.7 269.9 178.2 The Nasdaq Stock Market matched market share 16.8 % 17.5 % 16.8 % 17.2 % Nasdaq BX matched market share 0.9 % 1.8 % 1.1 % 2.0 % Nasdaq PSX matched market share 0.6 % 0.8 % 0.6 % 0.7 % Total matched market share executed on Nasdaq's exchanges 18.3 % 20.1 % 18.5 % 19.9 % Market share reported to theFINRA /Nasdaq Trade Reporting Facility 31.5 % 29.9 % 30.9 % 29.8 % Total market share(2) 49.8 % 50.0 % 49.4 % 49.7 % Nasdaq Nordic and Nasdaq Baltic securities Average daily number of equity trades executed on Nasdaq's exchanges 937,245 581,987 980,637 577,963 Total average daily value of shares traded (in billions) $ 5.6
76.4 % 70.3 % 75.5 % 68.6 %
FICC
Fixed Income U.S. fixed income volume ($ billions traded)$ 1,246
116,057 126,323 115,586 121,128
Commodities
Power contracts cleared (TWh)(3) 184 170 475 420 Corporate Services IPOs The Nasdaq Stock Market 42 60 69 97 Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic 9 14 16 18 Total new listings The Nasdaq Stock Market(4) 55 81 111 140 Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic(5) 13 19 22 28 Number of listed companies The Nasdaq Stock Market(6) 3,156 3,080 3,156 3,080 Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic(7) 1,042 1,029 1,042 1,029 Information Services Number of licensed ETPs 323 341 323 341 ETP AUM tracking Nasdaq indexes (in billions) $ 272
$ 38
$ 247 N/M N/M 35 --------------------------------------------------------------------------------
____________
(1) Includes Finnish option contracts traded on Eurex for which Nasdaq and Eurex have a revenue sharing arrangement. (2) Includes transactions executed onThe Nasdaq Stock Market's , Nasdaq BX's and Nasdaq PSX's systems plus trades reported through theFINRA /Nasdaq Trade Reporting Facility. (3) Transactions executed onNasdaq Commodities or OTC and reported for clearing toNasdaq Commodities measured by Terawatt hours (TWh). (4) New listings include IPOs, including issuers that switched from other listing venues, closed-end funds and separately listed ETPs. (5) 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. (6) Number of total listings onThe Nasdaq Stock Market at period end, including 410 ETPs as ofJune 30, 2020 and 374 as ofJune 30, 2019 . (7) Represents companies listed on the Nasdaq Nordic and Nasdaq Baltic exchanges and companies on the alternative markets of Nasdaq First North. (8) Total contract value of orders signed during the period. (9) ARR for a given period is the annualized revenue of active Market Technology support and SaaS subscription contracts. ARR is currently one of our key performance metrics to assess the health and trajectory of our 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. N/M Not meaningful. * * * * * * Financial Summary The following table summarizes our financial performance for the three and six months endedJune 30, 2020 as compared to the same periods in 2019. For a detailed discussion of our results of operations, see "Segment Operating Results" below. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 Percentage Change 2020 2019 Percentage Change (in millions, except per (in millions, except per share share amounts) amounts) Revenues less transaction-based expenses$ 699 $ 623 12.2 % $ 1,400$ 1,257 11.4 % Operating expenses 384 367 4.6 % 810 726 11.6 % Operating income 315 256 23.0 % 590 531 11.1 % Interest expense (26) (31) (16.1) % (52) (68) (23.5) % Net gain on divestiture of business - - - % - 27 (100.0) % Net income from unconsolidated investees 26 10 160.0 % 43 55 (21.8) % Income before income taxes 316 239 32.2 % 589 552 6.7 % Income tax provision 75 65 15.4 % 145 131 10.7 % Net income attributable to Nasdaq$ 241 $ 174 38.5 % $ 444$ 421 5.5 % Diluted earnings per share$ 1.45 $ 1.04 39.4 % $ 2.67$ 2.52 6.0 % Cash dividends declared per common share$ 0.49 $ 0.47 4.3 % $ 0.96$ 0.91 5.5 % In countries with currencies other than theU.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 3. Quantitative and Qualitative Disclosures about Market Risk." 36 -------------------------------------------------------------------------------- Segment Operating Results The following table shows our revenues by segment, transaction-based expenses for our Market Services segment and total revenues less transaction-based expenses: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 Percentage Change 2020 2019 Percentage Change (in millions) (in millions) Market Services$ 975 $ 665 46.6 % $ 1,908$ 1,304 46.3 % Transaction-based expenses (699) (438) 59.6 % (1,351) (843) 60.3 % Market Services revenues less transaction-based expenses 276 227 21.6 % 557 461 20.8 % Corporate Services 126 123 2.4 % 254 243 4.5 % Information Services 213 194 9.8 % 424 387 9.6 % Market Technology 84 79 6.3 % 165 156 5.8 % Other revenues(1) - - - % - 10 (100.0) % Total revenues less transaction-based expenses$ 699 $ 623 12.2 % $ 1,400$ 1,257 11.4 % ____________ (1) Includes the revenues from the BWise enterprise governance, risk and compliance software platform which was sold inMarch 2019 . Prior to the sale date, these revenues were included in our Corporate Solutions business within our Corporate Services segment. See "2019 Divestiture," of Note 4, "Acquisitions and Divestiture," to the condensed consolidated financial statements for further discussion. 37 -------------------------------------------------------------------------------- The following charts show our Market Services, Corporate Services, Information Services, and Market Technology segments as a percentage of our total revenues less transaction-based expenses of$699 million for the three months endedJune 30, 2020 ,$623 million for the three months endedJune 30, 2019 ,$1,400 million for the six months endedJune 30, 2020 , and$1,257 million for the six months endedJune 30, 2019 : [[Image Removed: ndaq-20200630_g4.jpg]] [[Image Removed: ndaq-20200630_g5.jpg]]
[[Image Removed: ndaq-20200630_g6.jpg]] [[Image Removed: ndaq-20200630_g7.jpg]]
38 -------------------------------------------------------------------------------- MARKET SERVICES The following table shows total revenues, transaction-based expenses, and total revenues less transaction-based expenses from our Market Services segment: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 Percentage Change 2020 2019 Percentage Change (in millions) (in millions) Market Services Revenues: Equity Derivative Trading and Clearing Revenues(1)$ 297 $ 203 46.3 % $ 583$ 396 47.2 % Transaction-based expenses: Transaction rebates (199) (119) 67.2 % (371) (231) 60.6 % Brokerage, clearance and exchange fees(1) (15) (12) 25.0 % (35) (21) 66.7 % Equity derivative trading and clearing revenues less transaction-based expenses 83 72 15.3 % 177 144 22.9 % Cash Equity Trading Revenues(2) 590 372 58.6 % 1,147 724 58.4 % Transaction-based expenses: Transaction rebates (331) (211) 56.9 % (638) (429) 48.7 % Brokerage, clearance and exchange fees(2) (153) (95) 61.1 % (306) (160) 91.3 % Cash equity trading revenues less transaction-based expenses 106 66 60.6 % 203 135 50.4 % FICC Revenues 15 17 (11.8) % 33 38 (13.2) % Transaction-based expenses: Transaction rebates - (1) (100.0) % - (1) (100.0) % Brokerage, clearance and exchange fees (1) - N/M (1) (1) - % FICC revenues less transaction-based expenses 14 16 (12.5) % 32 36 (11.1) % Trade Management Services Revenues 73 73 - % 145 146 (0.7) % Total Market Services revenues less transaction-based expenses$ 276 $ 227 21.6 % $ 557$ 461 20.8 % ____________ (1) Includes Section 31 fees of$14 million in the second quarter of 2020,$31 million in the first six months of 2020,$11 million in the second quarter of 2019, and$19 million in the first six months of 2019. Section 31 fees are recorded as equity derivative trading and clearing revenues with a corresponding amount recorded in transaction-based expenses. (2) Includes Section 31 fees of$145 million in the second quarter of 2020,$290 million in the first six months of 2020,$90 million in the second quarter of 2019, and$152 million in in the first six months of 2019. Section 31 fees are recorded as cash equity trading revenues with a corresponding amount recorded in transaction-based expenses. N/M Not meaningful. Equity Derivative Trading and Clearing Revenues Equity derivative trading and clearing revenues and equity derivative trading and clearing revenues less transaction-based expenses increased in the second quarter and first six months of 2020 compared with the same periods in 2019. The increase in equity derivative trading and clearing revenues was primarily due to higherU.S. industry trading volumes, a higherU.S. gross capture rate, and higher Section 31 pass-through fee revenue, partially offset by lower overallU.S. matched market share executed on Nasdaq's exchanges. The increase in equity derivative trading and clearing revenues less transaction-based expenses was primarily due to higherU.S. industry trading volumes, partially offset by a lowerU.S. net capture rate and lower overallU.S. matched market share executed on Nasdaq's exchanges. Section 31 fees are recorded as equity derivative trading and clearing revenues with a corresponding amount recorded as transaction-based expenses. In theU.S. , we are assessed these 39 -------------------------------------------------------------------------------- fees from theSEC 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 theSEC , 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 transaction-based expenses, there is no impact on our revenues less transaction-based expenses. Section 31 fees increased in the second quarter and first six months of 2020 compared with the same periods in 2019 primarily due to higher averageSEC fee rates and 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 the second quarter and first six months of 2020 compared with the same periods in 2019 primarily due to higherU.S. industry trading volumes and an increase in theU.S. rebate capture rate, partially offset by a decrease in our overallU.S. matched market share executed on Nasdaq's exchanges. Brokerage, clearance and exchange fees increased in the second quarter and first six months of 2020 compared with the same periods in 2019 primarily due to higher Section 31 pass-through fees, as discussed above. Cash Equity Trading Revenues Cash equity trading revenues and cash equity trading revenues less transaction-based expenses increased in the second quarter and first six months of 2020 compared with the same periods in 2019 primarily due to higherU.S. and European industry trading volumes, partially offset by lower overallU.S. matched market share executed on Nasdaq's exchanges. Also contributing to the increase in cash equity trading revenues were higher Section 31 pass-through fee revenue and, for the first six months of 2020, a higherU.S. gross capture rate, while a higher netU.S. capture rate also contributed to the increase in cash equity trading revenues less transaction-based expenses for the second quarter and first six months of 2020. Similar to equity derivative trading and clearing, in theU.S. we record Section 31 fees as cash equity trading revenues with a corresponding amount recorded as transaction-based expenses. We are assessed these fees from theSEC 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 transaction-based expenses, there is no impact on our revenues less transaction-based expenses. Section 31 fees increased in the second quarter and first six months of 2020 compared with the same periods in 2019, primarily due to higher averageSEC fee rates and higher dollar value traded on Nasdaq's exchanges. Transaction rebates increased in the second quarter and first six months of 2020 compared with the same period in 2019. ForThe Nasdaq Stock Market , Nasdaq PSX and Nasdaq CXC, we credit a portion of the per share execution charge to the market participant that provides the liquidity, and for Nasdaq BX and Nasdaq CX2, we credit a portion of the per share execution charge to the market participant that takes the liquidity. The increase in the second quarter and first six months of 2020 was primarily due to higherU.S. industry trading volumes, partially offset by lower overallU.S. matched market share executed on Nasdaq's exchanges and a lower rebate capture rate. Brokerage, clearance and exchange fees increased in the second quarter and first six months of 2020 compared with the same periods in 2019 primarily due to higher Section 31 pass-through fees, as discussed above, and higher routing fees. FICC Revenues FICC revenues and FICC revenues less transaction-based expenses decreased in the second quarter and first six months of 2020 compared with the same periods in 2019 primarily due to lowerU.S. fixed income products revenues and the sale of the core assets of our NFX business, partially offset by higher European products revenues. Trade Management Services Revenues Trade management services revenues were unchanged in the second quarter and decreased slightly in the first six months of 2020 compared with the same periods in 2019. * * * * * * CORPORATE SERVICES The following table shows revenues from our Corporate Services segment: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 Percentage Change 2020 2019 Percentage Change (in millions) (in millions) Corporate Services: Listing Services $ 74$ 74 - % $ 149$ 145 2.8 % Corporate Solutions $ 52$ 49 6.1 % 105 98 7.1 % Total Corporate Services$ 126 $ 123 2.4 % $ 254$ 243 4.5 % Listing Services Revenues Listing services revenues were unchanged in the second quarter of 2020 and increased in the first six months of 2020 compared with the same periods in 2019. In both periods, revenues increased due to higherU.S. listings revenues. In the second quarter of 40 -------------------------------------------------------------------------------- 2020, the increase was offset by lower event-related revenues at the Nasdaq MarketSite and lower NPM program activity, both mainly due to the impact of COVID-19. Corporate Solutions Revenues Corporate solutions revenues increased in the second quarter and first six months of 2020 compared with the same periods in 2019 reflecting an increase in governance solutions revenues and investor relations intelligence revenues. INFORMATION SERVICES The following table shows revenues from our Information Services segment: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 Percentage Change 2020 2019 Percentage Change (in millions) (in millions) Information Services: Market Data$ 101 $ 100 1.0 % $ 198$ 200 (1.0) % Index 68 55 23.6 % 141 109 29.4 % Investment Data & Analytics 44 39 12.8 % 85 78 9.0 % Total Information Services$ 213 $ 194 9.8 % $ 424$ 387 9.6 % Market Data Revenues Market data revenues increased slightly in the second quarter of 2020 compared with the same period in 2019 primarily due to organic growth inU.S. proprietary products from new sales, including continued expansion geographically, partially offset by lower shared tape plan revenues. The slight decrease in the first six months of 2020 compared with the same period in 2019 was primarily due to lower under-reported data usage, partially offset by new sales, including continued geographic expansion globally. Index Revenues Index revenues increased in the second quarter and first six months of 2020 compared with the same periods in 2019 primarily due to higher licensing revenue from higher average AUM in ETPs linked to Nasdaq indexes, higher licensing revenues from futures trading linked to the Nasdaq 100 Index, and higher index data revenues. Investment Data & Analytics Revenues Investment data & analytics revenues increased in the second quarter and first six months of 2020 compared with the same periods in 2019 primarily due to the acquisition of Solovis and growth in eVestment. * * * * * * MARKET TECHNOLOGY The following table shows revenues from our Market Technology segment: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 Percentage Change 2020 2019 Percentage Change (in millions) (in millions) Market Technology $ 84$ 79 6.3 % $ 165$ 156 5.8 % Market Technology Revenues Market technology revenues increased in the second quarter and first six months of 2020 compared with the same periods in 2019. The increase in the second quarter was primarily due to an increase in SaaS surveillance revenues. The increase for the first six months was due to increases in SaaS surveillance revenues and software delivery and support projects. OTHER REVENUES Other revenues include the revenues from the BWise enterprise governance, risk and compliance software platform, which was sold inMarch 2019 . Prior to the sale date, these revenues were included in our Corporate Solutions business. See "2019 Divestiture," of Note 4, "Acquisitions and Divestiture," to the condensed consolidated financial statements for further discussion of this divestiture. 41 --------------------------------------------------------------------------------
Expenses
Operating Expenses The following table shows our operating expenses: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 Percentage Change 2020 2019 Percentage Change (in millions) (in millions) Compensation and benefits$ 189 $ 169 11.8 % $ 384$ 344 11.6 % Professional and contract services 31 30 3.3 % 58 68 (14.7) % Computer operations and data communications 35 33 6.1 % 70 65 7.7 % Occupancy 26 24 8.3 % 51 48 6.3 % General, administrative and other 25 40 (37.5) % 86 56 53.6 % Marketing and advertising 4 10 (60.0) % 14 20 (30.0) % Depreciation and amortization 50 48 4.2 % 98 96 2.1 % Regulatory 7 8 (12.5) % 14 15 (6.7) % Merger and strategic initiatives 4 5 (20.0) % 10 14 (28.6) % Restructuring charges 13 - N/M 25 - N/M Total operating expenses$ 384 $ 367 4.6 % $ 810$ 726 11.6 % _______ N/M Not meaningful. The increase in compensation and benefits expense in the second quarter and first six months of 2020 was primarily due to higher performance incentives and higher compensation costs resulting from our recent acquisitions. Partially offsetting the higher compensation and benefits expense in the first six months of 2020 was lower compensation costs resulting from our 2019 divestiture. The favorable impact from foreign exchange was$2 million for the second quarter of 2020 and$5 million for the first six months of 2020. Headcount increased to 4,670 employees as ofJune 30, 2020 from 4,296 as ofJune 30, 2019 primarily due to our recent acquisitions and growth in our Market Technology and Investment Data & Analytics businesses. Professional and contract services expense increased slightly in the second quarter of 2020 compared with the same period in 2019. The decrease in the first six months of 2020 was primarily due to lower consulting costs and our 2019 divestiture. Computer operations and data communications expense increased in the second quarter and first six months of 2020 primarily due to higher market data feed costs. Occupancy expense increased in the second quarter and first six months of 2020 mainly due to higher costs associated with additional facility and rent costs resulting from expansion of our newU.S. headquarters inNew York . General, administrative and other expense decreased in the second quarter of 2020 reflecting a loss on the early extinguishment of our 2020 Notes in the second quarter of 2019 and lower corporate travel costs, partially offset by charitable contributions made to theNasdaq Foundation and to social justice charities. The increase in the first six months of 2020 was primarily due to a loss on the early extinguishment of our 2021 Notes and charitable contributions made to the COVID-19 response and relief efforts and the contributions described above. Marketing and advertising expense decreased in the second quarter and first six months of 2020 primarily due to lower event spending. Merger and strategic initiatives expense decreased in the second quarter and first six months of 2020. 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. Restructuring charges were$13 million in the second quarter and$25 million in the first six months of 2020. See Note 19, "Restructuring Charges," to the condensed consolidated financial statements for further discussion of our 2019 restructuring plan and charges associated with this plan. 42 -------------------------------------------------------------------------------- Non-operating Income and Expenses The following table shows our non-operating income and expenses: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 Percentage Change 2020 2019 Percentage Change (in millions) (in millions) Interest income$ 1 $ 3 (66.7) % $ 3$ 6 (50.0) % Interest expense (26) (31) (16.1) % (52) (68) (23.5) % Net interest expense (25) (28) (10.7) % (49) (62) (21.0) % Net gain on divestiture of business - - - % - 27 (100.0) % Other income - 1 (100.0) 5 1 400.0 % Net income from unconsolidated investees 26 10 160.0 % 43 55 (21.8) % Total non-operating income (expenses)$ 1 $ (17) (105.9) % $ (1)$ 21 (104.8) % Interest Expense Interest expense decreased in the second quarter and first six months of 2020 compared with the same periods in 2019 primarily due to the refinancing of our 3.875% senior notes inMarch 2020 with the 2030 Notes at a lower interest rate, the refinancing of our 5.55% senior notes inMay 2019 with the 2029 Notes at a lower interest rate and the repayment of our senior unsecured floating rate notes inMarch 2019 with commercial paper issuances and cash on hand. See Note 8, "Debt Obligations," to the condensed consolidated financial statements for further discussion of our debt obligations. The following table shows our interest expense: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 Percentage Change 2020 2019 Percentage Change (in millions) (in millions) Interest expense on debt $ 24$ 29 (17.2) % $ 48$ 64 (25.0) % Accretion of debt issuance costs and debt discount 1 1 - % 3 3 - % Other fees 1 1 - % 1 1 - % Interest expense $ 26$ 31 (16.1) % $ 52$ 68 (23.5) %Net Gain on Divestiture of Business The net gain on divestiture of business in the first six months of 2019 primarily related to our divestiture of BWise. See "2019 Divestiture," of Note 4, "Acquisitions and Divestiture," to the condensed consolidated financial statements for further discussion. Net Income from Unconsolidated Investees Net income from unconsolidated investees increased in the second quarter and decreased in the first six months of 2020 compared with the same periods in 2019 primarily due to income recognized from our equity method investment in OCC. See "Equity Method Investments," of Note 6, "Investments," to the condensed consolidated financial statements for further discussion. Tax Matters The following table shows our income tax provision and effective tax rate: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 Percentage Change 2020 2019 Percentage Change ($ in millions) ($ in millions) Income tax provision $ 75$ 65 15.4 % $ 145$ 131 10.7 % Effective tax rate 23.7 % 27.2 % 24.6 % 23.7 % For further discussion of our tax matters, see Note 16, "Income Taxes," to the condensed consolidated financial statements. Non-GAAP Financial Measures In addition to disclosing results determined in accordance withU.S. GAAP, we also have provided non-GAAP net income attributable to Nasdaq and non-GAAP diluted earnings per share. Management uses this non-GAAP information internally, along withU.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 43 -------------------------------------------------------------------------------- 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 withU.S. GAAP. We recommend investors review theU.S. GAAP financial measures included in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and the notes thereto. When viewed in conjunction with ourU.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 thanU.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 onU.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 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 19, "Restructuring Charges," to the condensed consolidated financial statements for further discussion of our 2019 restructuring plan. Charges associated with this plan represent a fundamental shift in our strategy and technology as well as executive re-alignment and will be 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 Note 6, "Investments," to the condensed consolidated financial statements for further discussion. Our income on our investment in OCC may vary significantly compared to prior years due to the disapproval of the OCC's capital plan. 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. For the three and six months endedJune 30, 2020 , other significant items included charitable contributions made to theNasdaq Foundation , COVID-19 response and relief efforts, and social justice charities which are recorded in general, administrative and other expense in our Condensed Consolidated Statements of Income. The first six months of 2020 also included a loss on extinguishment of debt which is recorded in general, administrative and other expense in our Condensed Consolidated Statements of Income. For the three and six months endedJune 30, 2019 , other significant items primarily included a loss on extinguishment of debt which is recorded in general, administrative and other expense in our Condensed Consolidated Statements of Income. The first six months of 2019 also included a net gain on divestiture of business which represents our pre-tax net gain of$27 million on the sale of BWise. Significant tax items: The non-GAAP adjustment to the income tax provision included the tax impact of each non-GAAP adjustment and: 44 -------------------------------------------------------------------------------- •for the three and six months endedJune 30, 2020 , a tax benefit on compensation related deductions determined to be allowable in the current period; •for the six months endedJune 30, 2020 and 2019, excess tax benefits 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. This item is subject to volatility and will vary based on the timing of the vesting of employee share-based compensation arrangements and fluctuation in our stock price; and •for the six months endedJune 30, 2019 , a tax benefit related to capital distributions from the OCC. * * * * * *
The following table shows reconciliations between
Three Months Ended June 30, Three Months Ended June 30, 2020 2019 (in millions, except share and per share amounts) Diluted Earnings Diluted Earnings Per Net Income Per Share Net Income ShareU.S. GAAP net income attributable to Nasdaq and diluted earnings per share $ 241$ 1.45 $ 174 $ 1.04 Non-GAAP adjustments: Amortization expense of acquired intangible assets 26 0.16 26 0.16 Merger and strategic initiatives expense 4 0.02 5 0.03 Restructuring charges 13 0.08 - - Net income from unconsolidated investee (25) (0.15) (9) (0.05) Extinguishment of debt - - 11 0.06 Charitable donations 12 0.07 - - Other 2 0.01 3 0.02 Total non-GAAP adjustments 32 0.19 36 0.22 Adjustment to the income tax provision to reflect non-GAAP adjustments and other tax items (17) (0.10) (7) (0.04) Total non-GAAP adjustments, net of tax 15 0.09 29 0.18
Non-GAAP net income attributable to Nasdaq and diluted earnings per share
$ 256$ 1.54 $ 203 $ 1.22 Weighted-average common shares outstanding for diluted earnings per share 166,073,354 167,041,419 45
-------------------------------------------------------------------------------- Six Months Ended June 30, Six Months Ended June 30, 2020 2019 (in millions, except share and per share amounts) Diluted Earnings Diluted Earnings Per Net Income Per Share Net Income ShareU.S. GAAP net income attributable to Nasdaq and diluted earnings per share $ 444$ 2.67 $ 421 $ 2.52 Non-GAAP adjustments: Amortization expense of acquired intangible assets 50 0.30 51 0.31 Merger and strategic initiatives expense 10 0.06 14 0.08 Restructuring charges 25 0.15 - - Net income from unconsolidated investees (41) (0.25) (54) (0.32) Extinguishment of debt 36 0.22 11 0.06 Net gain on divestiture of business - - (27) (0.16) Charitable donations 17 0.10 - - Other 4 0.03 6 0.04 Total non-GAAP adjustments 101 0.61 1 0.01 Adjustment to the income tax provision to reflect non-GAAP adjustments and other tax items (36) (0.22) (11) (0.07)
Excess tax benefits related to employee share-based compensation
(3) (0.02) (4) (0.02) Total non-GAAP tax adjustments (39) (0.24) (15) (0.09) Total non-GAAP adjustments, net of tax 62 0.37 (14) (0.08)
Non-GAAP net income attributable to Nasdaq and diluted earnings per share
$ 506$ 3.04 $ 407 $ 2.44 Weighted-average common shares outstanding for diluted earnings per share 166,424,676 167,034,783 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. In response to the uncertainties posed by COVID-19 and related economic impacts, we took actions to strengthen our liquidity and cash position and to reduce our refinancing risk. InMarch 2020 , we observed that conditions in the market for Tier 2 commercial paper issuers were deteriorating, impacting both costs and actionable duration of commercial paper issues. To mitigate funding uncertainties and as a precautionary measure to maximize our liquidity and increase our available cash on hand, Nasdaq borrowed$799 million under the revolving credit commitment of the 2017 Credit Facility. See "2017 Credit Facility" of Note 8, "Debt Obligations," to the condensed consolidated financial statements for further discussion of our 2017 Credit Facility. InApril 2020 , we issued the 2050 Notes and used the net proceeds from the 2050 Notes to repay a portion of amounts previously borrowed under the 2017 Credit Facility. For further discussion of the 2050 Notes, see "3.25% Senior Unsecured Notes Due 2050," of Note 8, "Debt Obligations," to the condensed consolidated financial statements. InJune 2020 , the remaining outstanding amount under the 2017 Credit Facility was repaid using cash on hand. As ofJune 30, 2020 , the total remaining amount available under the 2017 Credit Facility was$999 million , which excludes the amount that supports a letter of credit. Also inJune 2020 , we repaid all outstanding borrowings under our commercial paper program. InFebruary 2020 , we issued the 2030 Notes. We primarily used the net proceeds from the 2030 Notes to redeem the 2021 Notes and for other general corporate purposes. See "0.875% Senior Unsecured Notes Due 2030," and "Early Extinguishment of 3.875% Senior Unsecured Notes Due 2021," of Note 8, "Debt Obligations," to the condensed consolidated financial statements for further discussion. This offering reduced our borrowing costs and also eliminated near-term bond maturities untilMay 2023 . As ofJune 30, 2020 , our sources and uses of cash were not materially impacted by COVID-19 and we have not identified any material liquidity deficiencies as a result 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, 46 -------------------------------------------------------------------------------- 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 commitment and commercial paper program will provide sufficient cash to fund our operating expenses, capital expenditures, debt repayments, any share repurchases, and any dividends. As part of the purchase price consideration of a prior acquisition, Nasdaq has contingent future obligations to issue 992,247 shares of Nasdaq common stock annually through 2027. See "Non-Cash Contingent Consideration," of Note 17, "Commitments, Contingencies and Guarantees," to the condensed 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$467 million as ofJune 30, 2020 , compared with$63 million as ofDecember 31, 2019 , an increase of$404 million . Current asset balance changes increased working capital by$426 million , with increases in cash and cash equivalents, default funds and margin deposits, and receivables, net, partially offset by decreases in financial investments and other current assets. Current liability balance changes decreased working capital by$22 million , due to increases in Section 31 fees payable to theSEC , deferred revenue, default funds and margin deposits and other current liabilities, partially offset by decreases in short-term debt, accrued personnel costs, and accounts payable and accrued expenses. Principal factors that could affect the availability of our internally-generated funds include: • deterioration of our revenues in any of our business segments; • changes in regulatory and working capital requirements; and • an increase in our expenses. Principal factors that could affect our ability to obtain cash from external sources include: • operating covenants contained in our credit facilities that limit our total borrowing capacity; • increases in interest rates under our credit facilities; • credit rating downgrades, which could limit our access to additional debt; • a decrease in the market price of our common stock; • volatility or disruption in the public debt and equity markets; and • the impact of the COVID-19 pandemic on our business. The following sections discuss the effects of changes in our financial assets, debt obligations, regulatory capital requirements, and cash flows on our liquidity and capital resources. Financial Assets The following table summarizes our financial assets: June 30, 2020 December 31, 2019 (in millions) Cash and cash equivalents$ 711 $ 332 Restricted cash 30 30 Financial investments 206 291 Total financial assets$ 947 $ 653 Cash and Cash Equivalents and Restricted Cash 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 ofJune 30, 2020 , our cash and cash equivalents of$711 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 ofJune 30, 2020 increased$379 million fromDecember 31, 2019 , primarily due to: •proceeds from issuances of long-term debt, net of issuance costs and utilization of credit commitment; •net cash provided by operating activities; and •proceeds from the net sales of securities. These increases were partially offset by: •repayments of borrowings under our credit commitment and debt obligations; •repayments of commercial paper, net; •cash dividends paid on our common stock; •cash paid for acquisitions, net of cash and cash equivalents acquired; •repurchases of our common stock; •purchases of property and equipment; and •payment of debt extinguishment cost. See "Cash Flow Analysis" below for further discussion. Restricted cash is restricted from withdrawal due to contractual or regulatory requirements or is not available for general use. Restricted cash was$30 million as ofJune 30, 2020 , unchanged fromDecember 31, 2019 . Restricted cash is classified as restricted cash in the Condensed Consolidated Balance Sheets. Repatriation of Cash Our cash and cash equivalents held outside of theU.S. in various foreign subsidiaries totaled$131 million as ofJune 30, 2020 and$160 million as ofDecember 31, 2019 . The remaining balance held in theU.S. totaled$580 million 47 -------------------------------------------------------------------------------- as ofJune 30, 2020 and$172 million as ofDecember 31, 2019 . Unremitted earnings of certain subsidiaries outside of theU.S. are used to finance our international operations and are considered to be indefinitely reinvested. Share Repurchase Program See "Share Repurchase Program," of Note 11, "Nasdaq Stockholders' Equity," to the condensed consolidated financial statements for further discussion of our share repurchase program. Cash Dividends on Common Stock The following table shows quarterly cash dividends paid per common share on our outstanding common stock: 2020 2019 First quarter$ 0.47 $ 0.44 Second quarter 0.49 0.47 Total$ 0.96 $ 0.91 See "Cash Dividends on Common Stock," of Note 11, "Nasdaq Stockholders' Equity," to the condensed consolidated financial statements for further discussion of the dividends. Financial Investments Our financial investments totaled$206 million as ofJune 30, 2020 and$291 million as ofDecember 31, 2019 and are primarily comprised of highly rated European government debt securities and highly rated corporate debt. Of these securities,$175 million as ofJune 30, 2020 and$169 million as ofDecember 31, 2019 are assets primarily utilized to meet regulatory capital requirements, mainly for our clearing operations at Nasdaq Clearing. See Note 6, "Investments," to the condensed consolidated financial statements for further discussion. * * * * * * Debt Obligations The following table summarizes our debt obligations by contractual maturity: December 31, Maturity Date June 30, 2020 2019 (in millions) Short-term debt - commercial paper $ -$ 391 Long-term debt: 3.875% senior unsecured notes Repaid March 2020 - 671 1.75% senior unsecured notes May 2023 670 668$1 billion senior unsecured revolving credit facility April 2022 (2) (2) 4.25% senior unsecured notes June 2024 498 497 3.85% senior unsecured notes June 2026 497 497 1.75% senior unsecured notes March 2029 667 665 0.875% senior unsecured notes February 2030 667 - 3.25% senior unsecured notes April 2050 485 - Total long-term debt 3,482 2,996 Total debt obligations$ 3,482 $ 3,387 In addition to the$1 billion senior unsecured revolving credit facility, we also have other credit facilities primarily related to our Nasdaq Clearing operations in order to provide further liquidity. Other credit facilities, which are available in multiple currencies, totaled$205 million as ofJune 30, 2020 and$203 million as ofDecember 31, 2019 in available liquidity, none of which was utilized as ofJune 30, 2020 , and of which$15 million was utilized as ofDecember 31, 2019 . As ofJune 30, 2020 , we were in compliance with the covenants of all of our debt obligations. See Note 8, "Debt Obligations," to the condensed 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 ofJune 30, 2020 , our required regulatory capital of$153 million was comprised of highly rated European government debt securities that are included in financial investments in the Condensed Consolidated Balance Sheets. 48 -------------------------------------------------------------------------------- Broker-Dealer Net Capital Requirements Our broker-dealer subsidiaries, Nasdaq Execution Services, Execution Access,NPM Securities , SMTX, 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 ofJune 30, 2020 , the combined required minimum net capital totaled$1 million and the combined excess capital totaled$52 million , substantially all of which is held in cash and cash equivalents in the Condensed Consolidated Balance Sheets. The required minimum net capital is included in restricted cash in the Condensed 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 ofJune 30, 2020 , our required regulatory capital of$35 million was invested in European government debt securities that are included in financial investments and restricted cash in the Condensed 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 ofJune 30, 2020 , other required regulatory capital was$11 million and was primarily included in restricted cash and financial investments in the Condensed Consolidated Balance Sheets. * * * * * * Cash Flow Analysis The following table summarizes the changes in cash flows: Six
Months Ended
2020 2019 Percentage Change Net cash provided by (used in): (in millions) Operating activities$ 821 $ 523 57.0 % Investing activities (145) (163) (11.0) % Financing activities (294) (573) (48.7) % Effect of exchange rate changes on cash and cash equivalents and restricted cash (3) (10) (70.0) %
Net increase (decrease) in cash and cash equivalents and restricted cash
379 (223) (270.0) % Cash and cash equivalents and restricted cash at beginning of period 362 586 (38.2) % Cash and cash equivalents and restricted cash at end of period$ 741 $ 363 104.1 % 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; 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 which is 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 theSEC , which is impacted by the timing of collections from customers and payments to theSEC . Net cash provided by operating activities increased$298 million for the six months endedJune 30, 2020 compared with the same period in 2019. The increase was primarily driven by higher net income, an increase in Section 31 fees payable to theSEC as a result of unusually highU.S. industry trading volumes, lower performance incentive payments made in the first six months of 2020 compared with the same period in 2019 primarily due to prior year performance, lower income taxes paid, and lower interest paid due to a decline in average interest rates on our debt obligations, partially offset by an increase in receivables, net due to higherU.S. industry trading volumes.Net Cash Used in Investing Activities Net cash used in investing activities for the six months endedJune 30, 2020 primarily related to$157 million of cash used for acquisitions, net of cash and cash equivalents acquired and$68 million of purchases of property and equipment, partially offset by$85 million of proceeds from the net sales of securities. Net cash used in investing activities for the six months endedJune 30, 2019 primarily related to$193 million of cash used for the acquisition of Cinnober,$63 million of purchases of 49 -------------------------------------------------------------------------------- property and equipment, partially offset by receipt of cash of$108 million related to the sale of the BWise enterprise governance, risk and compliance software platform.Net Cash Used in Financing Activities Net cash used in financing activities for the six months endedJune 30, 2020 primarily related to$1,470 million in repayments of borrowings under our credit commitment and debt obligations,$391 million of net repayments of commercial paper,$158 million of dividend payments to our shareholders,$152 million in repurchases of common stock, and a$36 million payment for debt extinguishment costs, partially offset by$1,928 million of proceeds from issuances of long-term debt and the utilization of our credit commitment. Net cash used in financing activities for the six months endedJune 30, 2019 primarily related to$1,215 million in repayments of debt obligations,$150 million of dividend payments to our shareholders, and$50 million in repurchases of common stock, partially offset by$680 million from the utilization of our credit commitment and issuances of long-term debt and$192 million in net borrowings of commercial paper. See Note 4, "Acquisitions and Divestiture," to the condensed consolidated financial statements for further discussion of our acquisitions and divestiture. See Note 8, "Debt Obligations," to the condensed consolidated financial statements for further discussion of our debt obligations. See "Share Repurchase Program," and "Cash Dividends on Common Stock," of Note 11, "Nasdaq Stockholders' Equity," to the condensed consolidated financial statements for further discussion of our 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 shows these contractual obligations as of
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