Item 1. Financial Statements (Unaudited)

VISA INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

			June 30, 2022						September 30, 2021
			(in millions, except per share data)
Assets
Cash and cash equivalents			$	14,047					$	16,487
Restricted cash equivalents—U.S. litigation escrow			1,483						894
Investment securities			3,309						2,025
Settlement receivable			1,860						1,758
Accounts receivable			2,021						1,968
Customer collateral			2,261						2,260
Current portion of client incentives			1,323						1,359
Prepaid expenses and other current assets			2,667						856
Total current assets			28,971						27,607
Investment securities			2,240						1,705
Client incentives			3,321						3,245
Property, equipment and technology, net			3,146						2,715
Goodwill			17,977						15,958
Intangible assets, net			26,093						27,664
Other assets			3,662						4,002
Total assets			$	85,410					$	82,896
Liabilities
Accounts payable			$	228					$	266
Settlement payable			3,068						2,443
Customer collateral			2,261						2,260
Accrued compensation and benefits			1,106						1,211
Client incentives			5,608						5,243
Accrued liabilities			3,303						2,334
Current maturities of debt			3,249						999
Accrued litigation			1,486						983
Total current liabilities			20,309						15,739
Long-term debt			20,546						19,978
Deferred tax liabilities			5,685						6,128
Other liabilities			3,387						3,462
Total liabilities			49,927						45,307
Equity
Preferred stock, $0.0001 par value, 25 shares authorized and 5 shares issued and outstanding as follows:
Series A convertible participating preferred stock, less than one shares issued and outstanding at June 30, 2022 and September 30, 2021 (the “series A preferred stock”)			398						486
Series B convertible participating preferred stock, 2 shares issued and outstanding at June 30, 2022 and September 30, 2021 (the “series B preferred stock”)			936						1,071
Series C convertible participating preferred stock, 3 shares issued and outstanding at June 30, 2022 and September 30, 2021 (the “series C preferred stock”)			1,517						1,523
Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 1,637 and 1,677 shares issued and outstanding at June 30, 2022 and September 30, 2021 respectively			—						—
Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at June 30, 2022 and September 30, 2021			—						—
Class C common stock, $0.0001 par value, 1,097 shares authorized, 10 shares issued and outstanding at June 30, 2022 and September 30, 2021			—						—
Right to recover for covered losses			(23)						(133)
Additional paid-in capital			18,962						18,855
Accumulated income			14,960						15,351
Accumulated other comprehensive income (loss), net:
Investment securities			(74)						(1)
Defined benefit pension and other postretirement plans			(48)						(49)
Derivative instruments			135						(257)
Foreign currency translation adjustments			(1,280)						743
Total accumulated other comprehensive income (loss), net			(1,267)						436
Total equity			35,483						37,589
Total liabilities and equity			$	85,410					$	82,896

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

VISA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED**)**

			Three Months Ended June 30,												Nine Months Ended June 30,
			2022						2021						2022						2021
			(in millions, except per share data)
Net revenues			$	7,275					$	6,130					$	21,523					$	17,546
Operating Expenses
Personnel			1,283						1,098						3,634						3,193
Marketing			313						268						907						679
Network and processing			178						186						558						538
Professional fees			117						108						342						273
Depreciation and amortization			230						204						635						602
General and administrative			289						204						856						770
Litigation provision			717						(2)						865						2
Total operating expenses			3,127						2,066						7,797						6,057
Operating income			4,148						4,064						13,726						11,489
Non-operating Income (Expense)
Interest expense, net			(111)						(131)						(379)						(388)
Investment income and other			(208)						456						(79)						664
Total non-operating income (expense)			(319)						325						(458)						276
Income before income taxes			3,829						4,389						13,268						11,765
Income tax provision			418						1,814						2,251						3,038
Net income			$	3,411					$	2,575					$	11,017					$	8,727
Basic Earnings Per Share
Class A common stock			$	1.60					$	1.18					$	5.15					$	3.99
Class B common stock			$	2.59					$	1.92					$	8.33					$	6.47
Class C common stock			$	6.42					$	4.72					$	20.58					$	15.94
Basic Weighted-average Shares Outstanding
Class A common stock			1,642						1,691						1,655						1,693
Class B common stock			245						245						245						245
Class C common stock			10						10						10						11
Diluted Earnings Per Share
Class A common stock			$	1.60					$	1.18					$	5.14					$	3.98
Class B common stock			$	2.59					$	1.91					$	8.33					$	6.46
Class C common stock			$	6.41					$	4.72					$	20.56					$	15.92
Diluted Weighted-average Shares Outstanding
Class A common stock			2,129						2,184						2,143						2,192
Class B common stock			245						245						245						245
Class C common stock			10						10						10						11

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

VISA INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

			Three Months Ended June 30,												Nine Months Ended June 30,
			2022						2021						2022						2021
			(in millions)
Net income			$	3,411					$	2,575					$	11,017					$	8,727
Other comprehensive income (loss), net of tax
Investment securities:
Net unrealized gain (loss)			(43)						(2)						(93)						(4)
Income tax effect			10						1						20						1
Reclassification adjustments			—						(1)						—						(1)
Defined benefit pension and other postretirement plans:
Net unrealized actuarial gain (loss) and prior service credit (cost)			—						—						(1)						(3)
Income tax effect			—						—						—						2
Reclassification adjustments			—						7						2						13
Income tax effect			—						(2)						—						(3)
Derivative instruments:
Net unrealized gain (loss)			348						(95)						539						(112)
Income tax effect			(68)						22						(103)						28
Reclassification adjustments			(9)						14						(48)						1
Income tax effect			—						(2)						4						3
Foreign currency translation adjustments			(1,100)						287						(2,023)						322
Other comprehensive income (loss), net of tax			(862)						229						(1,703)						247
Comprehensive income			$	2,549					$	2,804					$	9,314					$	8,974

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

VISA INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

			Three Months Ended June 30, 2022
			Preferred Stock																		Common Stock																		Preferred Stock						Right to Recover for Covered Losses						Additional Paid-In Capital						Accumulated Income						Accumulated Other Comprehensive Income (Loss), Net						Total Equity
			Series A						Series B						Series C						Class A						Class B						Class C
			(in millions, except per share data)
Balance as of March 31, 2022			—			(1)			2						3						1,648						245						10						$	2,987					$	(120)					$	18,876					$	14,651					$	(405)					$	35,989
Net income																																																									3,411												3,411
Other comprehensive income (loss), net of tax																																																															(862)						(862)
Comprehensive income																																																																					2,549
VE territory covered losses incurred																																													(15)																								(15)
Recovery through conversion rate adjustment																																							(112)						112																								—
Conversion of series A preferred stock upon sales into public market			—			(1)															—			(1)															(24)												24																		—
Conversion of class C common stock upon sales into public market																					1												—			(1)																																	—
Share-based compensation, net of forfeitures																																																			152																		152
Vesting of restricted stock and performance-based shares																					—			(1)																																													—
Restricted stock and performance-based shares settled in cash for taxes																					—			(1)																											(1)																		(1)
Cash proceeds from issuance of class A common stock under employee equity plans																					—			(1)																											40																		40
Cash dividends declared and paid, at a quarterly amount of $0.375 per class A common stock																																																									(798)												(798)
Repurchase of class A common stock																					(12)																														(129)						(2,304)												(2,433)
Balance as of June 30, 2022			—			(1)			2						3						1,637						245						10						$	2,851					$	(23)					$	18,962					$	14,960					$	(1,267)					$	35,483

(1)Increase, decrease or balance is less than one million shares.

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

VISA INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

(UNAUDITED)

			Nine Months Ended June 30, 2022
			Preferred Stock																		Common Stock																		Preferred Stock						Right to Recover for Covered Losses						Additional Paid-In Capital						Accumulated Income						Accumulated Other Comprehensive Income (Loss), Net						Total Equity
			Series A						Series B						Series C						Class A						Class B						Class C
			(in millions, except per share data)
Balance as of September 30, 2021			—			(1)			2						3						1,677						245						10						$	3,080					$	(133)					$	18,855					$	15,351					$	436					$	37,589
Net income																																																									11,017												11,017
Other comprehensive income (loss), net of tax																																																															(1,703)						(1,703)
Comprehensive income																																																																					9,314
VE territory covered losses incurred																																													(31)																								(31)
Recovery through conversion rate adjustment																																							(141)						141																								—
Conversion of series A preferred stock upon sales into public market			—			(1)															1																		(88)												88																		—
Conversion of class C common stock upon sales into public market																					1												—			(1)																																	—
Share-based compensation, net of forfeitures																																																			470																		470
Vesting of restricted stock and performance-based shares																					2																																																—
Restricted stock and performance-based shares settled in cash for taxes																					—			(1)																											(117)																		(117)
Cash proceeds from issuance of class A common stock under employee equity plans																					2																														153																		153
Cash dividends declared and paid, at a quarterly amount of $0.375 per class A common stock																																																									(2,409)												(2,409)
Repurchase of class A common stock																					(46)																														(487)						(8,999)												(9,486)
Balance as of June 30, 2022			—			(1)			2						3						1,637						245						10						$	2,851					$	(23)					$	18,962					$	14,960					$	(1,267)					$	35,483

(1)Increase, decrease or balance is less than one million shares.

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

VISA INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

(UNAUDITED)

			Three Months Ended June 30, 2021
			Preferred Stock																		Common Stock																		Preferred Stock						Right to Recover for Covered Losses						Additional Paid-In Capital						Accumulated Income						Accumulated Other Comprehensive Income (Loss), Net						Total Equity
			Series A						Series B						Series C						Class A						Class B						Class C
			(in millions, except per share data)
Balance as of March 31, 2021			—			(1)			2						3						1,694						245						11						$	3,347					$	(41)					$	18,505					$	15,513					$	372					$	37,696
Net income																																																									2,575												2,575
Other comprehensive income (loss), net of tax																																																															229						229
Comprehensive income																																																																					2,804
VE territory covered losses incurred																																													(21)																								(21)
Recovery through conversion rate adjustment																																							(40)						38																								(2)
Conversion of series A preferred stock upon sales into public market			—			(1)															3																		(175)												175																		—
Conversion of class C common stock upon sales into public market																					2												(1)																																				—
Share-based compensation, net of forfeitures																																																			159																		159
Vesting of restricted stock and performance-based shares																					—			(1)																																													—
Restricted stock and performance-based shares settled in cash for taxes																					—			(1)																											(2)																		(2)
Cash proceeds from issuance of class A common stock under employee equity plans																					—			(1)																											54																		54
Cash dividends declared and paid, at a quarterly amount of $0.32 per class A common stock																																																									(698)												(698)
Repurchase of class A common stock																					(10)																														(104)						(2,096)												(2,200)
Balance as of June 30, 2021			—			(1)			2						3						1,689						245						10						$	3,132					$	(24)					$	18,787					$	15,294					$	601					$	37,790

(1)Increase, decrease or balance is less than one million shares.

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

VISA INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

(UNAUDITED)

			Nine Months Ended June 30, 2021
			Preferred Stock																		Common Stock																		Preferred Stock						Right to Recover for Covered Losses						Additional Paid-In Capital						Accumulated Income						Accumulated Other Comprehensive Income (Loss), Net						Total Equity
			Series A						Series B						Series C						Class A						Class B						Class C
			(in millions, except per share data)
Balance as of September 30, 2020			—			(1)			2						3						1,683						245						11						$	5,086					$	(39)					$	16,721					$	14,088					$	354					$	36,210
Net income																																																									8,727												8,727
Other comprehensive income (loss), net of tax																																																															247						247
Comprehensive income																																																																					8,974
Adoption of new accounting standards																																																									3												3
VE territory covered losses incurred																																													(38)																								(38)
Recovery through conversion rate adjustment																																							(55)						53																								(2)
Conversion of series A preferred stock upon sales into public market			—			(1)															28																		(1,899)												1,899																		—
Conversion of class C common stock upon sales into public market																					2												(1)																																				—
Share-based compensation, net of forfeitures																																																			434																		434
Vesting of restricted stock and performance-based shares																					3																																																—
Restricted stock and performance-based shares settled in cash for taxes																					(1)																														(142)																		(142)
Cash proceeds from issuance of class A common stock under employee equity plans																					1																														162																		162
Cash dividends declared and paid, at a quarterly amount of $0.32 per class A common stock																																																									(2,102)												(2,102)
Repurchase of class A common stock																					(27)																														(287)						(5,422)												(5,709)
Balance as of June 30, 2021			—			(1)			2						3						1,689						245						10						$	3,132					$	(24)					$	18,787					$	15,294					$	601					$	37,790

(1)Increase, decrease or balance is less than one million shares.

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

VISA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

			Nine Months Ended June 30,
			2022						2021
			(in millions)
Operating Activities
Net income			$	11,017					$	8,727
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Client incentives			7,435						5,980
Share-based compensation			470						434
Depreciation and amortization of property, equipment, technology and intangible assets			635						602
Deferred income taxes			(203)						981
VE territory covered losses incurred			(31)						(38)
(Gains) losses on equity investments, net			142						(611)
Other			(71)						(82)
Change in operating assets and liabilities:
Settlement receivable			(248)						(351)
Accounts receivable			(80)						(220)
Client incentives			(7,038)						(5,202)
Other assets			(455)						(164)
Accounts payable			(29)						1
Settlement payable			886						574
Accrued and other liabilities			37						639
Accrued litigation			506						(14)
Net cash provided by (used in) operating activities			12,973						11,256
Investing Activities
Purchases of property, equipment and technology			(675)						(497)
Investment securities:
Purchases			(4,415)						(3,223)
Proceeds from maturities and sales			2,580						5,286
Acquisitions, net of cash and restricted cash acquired			(1,945)						(75)
Purchases of / contributions to other investments			(68)						(50)
Other investing activities			128						105
Net cash provided by (used in) investing activities			(4,395)						1,546
Financing Activities
Repurchase of class A common stock			(9,486)						(5,709)
Repayments of debt			—						(3,000)
Dividends paid			(2,409)						(2,102)
Proceeds from issuance of senior notes			3,218						—
Cash proceeds from issuance of class A common stock under employee equity plans			153						162
Restricted stock and performance-based shares settled in cash for taxes			(117)						(142)
Other financing activities			(15)						—
Net cash provided by (used in) financing activities			(8,656)						(10,791)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents			(725)						92
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents			(803)						2,103
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period			19,799						19,171
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period			$	18,996					$	21,274
Supplemental Disclosure
Cash paid for income taxes, net			$	2,891					$	2,134
Interest payments on debt			$	548					$	583
Accruals related to purchases of property, equipment and technology			$	34					$	52

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1—Summary of Significant Accounting Policies

Organization. Visa Inc. (“Visa” or the “Company”) is a global payments technology company that facilitates global commerce and money movement across more than 200 countries and territories. Visa and its wholly-owned consolidated subsidiaries operate one of the world’s largest electronic payments network — VisaNet — which provides transaction processing services (primarily authorization, clearing and settlement). The Company offers products and solutions that facilitate secure, reliable and efficient money movement for all participants in the ecosystem. Visa is not a financial institution and does not issue cards, extend credit or set rates and fees for account holders of Visa products. In most cases, account holder and merchant relationships belong to, and are managed by, Visa’s financial institution clients.

Consolidation and basis of presentation. The accompanying unaudited consolidated financial statements include the accounts of Visa and its consolidated entities and are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company consolidates its majority-owned and controlled entities, including variable interest entities (“VIEs”) for which the Company is the primary beneficiary. The Company’s investments in VIEs have not been material to its unaudited consolidated financial statements as of and for the periods presented. All significant intercompany accounts and transactions are eliminated in consolidation.

During the prior quarter, economic sanctions were imposed on Russia, impacting Visa and its clients. The extent and severity of the sanctions impacted the Company’s operations and a reduction in Ruble liquidity impacted the Company’s ability to manage operational impact and related foreign currency risk. In March 2022, the Company announced it was suspending its operations in Russia. In addition, the Company deconsolidated its Russian subsidiary, resulting in a pre-tax loss of $35 million for the nine months ended June 30, 2022, which is included in general and administrative expense on the consolidated statements of operations.

The accompanying unaudited consolidated financial statements are presented in accordance with U.S. Securities and Exchange Commission (“SEC”) requirements for Quarterly Reports on Form 10-Q and, consequently, do not include all of the annual disclosures required by U.S. GAAP. Reference should be made to the Visa Annual Report on Form 10-K for the year ended September 30, 2021 for additional disclosures, including a summary of the Company’s significant accounting policies.

In the opinion of management, the accompanying unaudited consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods presented. The results of operations for interim periods are not necessarily indicative of results for the full year.

Use of estimates. The preparation of the accompanying unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and reported amounts of revenues and expenses during the reporting period. These estimates may change as new events occur and additional information is obtained, and will be recognized in the period in which such changes occur. Future actual results could differ materially from these estimates.

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in the existing guidance and making other minor improvements. The Company adopted this guidance effective October 1, 2021. The adoption did not have a material impact on the consolidated financial statements.

In January 2020, the FASB issued ASU 2020-01, which clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for purposes of applying

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

the fair value measurement alternative. The Company adopted this guidance effective October 1, 2021. The adoption did not have a material impact on the consolidated financial statements.

Note 2—Acquisitions

Currencycloud

On December 20, 2021, Visa acquired The Currency Cloud Group Limited (“Currencycloud”), a UK-based global platform that enables banks and fintechs to provide innovative foreign exchange solutions for cross-border payments, for a total purchase consideration of $893 million (which includes the fair value of Visa’s previously held equity interest in Currencycloud). The Company allocated $150 million of the purchase consideration to technology, intangible assets, other net assets acquired and deferred tax liabilities and the remaining $743 million to goodwill.

Tink

On March 10, 2022, Visa acquired 100% of the share capital of Tink AB (“Tink”) for $1.9 billion in cash. Tink is a European open banking platform that enables financial institutions, fintechs and merchants to build financial products and services and move money. The acquisition is expected to help accelerate the adoption of open banking around the world by providing a secure, reliable platform for innovation.

Total purchase consideration has been allocated to the assets acquired and liabilities assumed and is subject to revision. If additional information becomes available, the Company may further revise the purchase price allocation as soon as practicable, but no later than one year from the acquisition date; however, at this time, material changes are not expected.

The following table summarizes the purchase price allocation for Tink:

			Purchase Price Allocation						Weighted-Average Useful Life
			(in millions)						(in years)
Technology			$	245					4
Customer relationships			90						6
Deferred tax liabilities			(71)
Other net assets acquired (liabilities assumed)			22
Goodwill			1,577
Total			$	1,863					5

Goodwill is primarily attributable to synergies expected to be achieved from the acquisition and the assembled workforce. None of the goodwill recognized is expected to be deductible for tax purposes.

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Note 3—Revenues

The nature, amount, timing and uncertainty of the Company’s revenues and cash flows and how they are affected by economic factors are most appropriately depicted through the Company’s revenue categories and geographical markets. The following tables disaggregate the Company’s net revenues by revenue category and by geography:

			Three Months Ended June 30,												Nine Months Ended June 30,
			2022						2021						2022						2021
			(in millions)
Service revenues			$	3,189					$	2,828					$	9,903					$	8,350
Data processing revenues			3,579						3,327						10,673						9,356
International transaction revenues			2,560						1,696						6,942						4,635
Other revenues			517						409						1,440						1,185
Client incentives			(2,570)						(2,130)						(7,435)						(5,980)
Net revenues			$	7,275					$	6,130					$	21,523					$	17,546

			Three Months Ended June 30,												Nine Months Ended June 30,
			2022						2021						2022						2021
			(in millions)
U.S.			$	3,170					$	2,806					$	9,427					$	8,156
International			4,105						3,324						12,096						9,390
Net revenues			$	7,275					$	6,130					$	21,523					$	17,546

Note 4—Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents

The Company reconciles cash, cash equivalents, restricted cash and restricted cash equivalents reported in the consolidated balance sheets that aggregate to the beginning and ending balances shown in the consolidated statements of cash flows as follows:

			June 30, 2022						September 30, 2021
			(in millions)
Cash and cash equivalents			$	14,047					$	16,487
Restricted cash and restricted cash equivalents:
U.S. litigation escrow			1,483						894
Customer collateral			2,261						2,260
Prepaid expenses and other current assets			1,205						158
Cash, cash equivalents, restricted cash and restricted cash equivalents			$	18,996					$	19,799

Prepaid expenses and other current assets include restricted cash and restricted cash equivalents related to funds held by the Company, primarily from Currencycloud, on behalf of clients in segregated bank accounts that cannot be withdrawn or used for general operating activities. These amounts are fully offset by corresponding liabilities recorded in accrued liabilities on the Company’s unaudited consolidated balance sheets.

Note 5—U.S. and Europe Retrospective Responsibility Plans

U.S. Retrospective Responsibility Plan

Under the terms of the U.S. retrospective responsibility plan, the Company maintains an escrow account from which settlements of, or judgments in, certain litigation referred to as the “U.S. covered litigation” are paid. The accrual related to the U.S. covered litigation could be either higher or lower than the U.S. litigation escrow account balance. See Note 13—Legal Matters.

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

The following table presents the changes in the restricted cash equivalents—U.S. litigation escrow account:

			Nine Months Ended June 30,
			2022						2021
			(in millions)
Balance at beginning of period			$	894					$	901
Deposits into the litigation escrow account			850						—
Payments to opt-out merchants(1) and interest earned on escrow funds			(261)						(7)
Balance at end of period			$	1,483					$	894

(1)These payments are associated with the interchange multidistrict litigation. See Note 13—Legal Matters.

Europe Retrospective Responsibility Plan

Visa Inc., Visa International and Visa Europe are parties to certain existing and potential litigation relating to the setting of multilateral interchange fee rates in the Visa Europe territory (the “VE territory covered litigation”). Under the terms of the Europe retrospective responsibility plan, the Company is entitled to recover certain losses resulting from VE territory covered litigation (the “VE territory covered losses”) through a periodic adjustment to the class A common stock conversion rates applicable to the series B and C preferred stock. VE territory covered losses are recorded in “right to recover for covered losses” within stockholders’ equity before the corresponding adjustment to the applicable conversion rate is effected. Adjustments to the conversion rate may be executed once in any six-month period unless a single, individual loss greater than €20 million is incurred, in which case, the six-month limitation does not apply. When the adjustment to the conversion rate is made, the amount previously recorded in “right to recover for covered losses” as contra-equity is then recorded against the book value of the preferred stock within stockholders’ equity.

The following table presents the activities related to VE territory covered losses in preferred stock and “right to recover for covered losses” within stockholders’ equity:

			Preferred Stock												Right to Recover for Covered Losses
			Series B						Series C
			(in millions)
Balance as of September 30, 2021			$	1,071					$	1,523					$	(133)
VE territory covered losses incurred(1)			—						—						(31)
Recovery through conversion rate adjustment			(135)						(6)						141
Balance as of June 30, 2022			$	936					$	1,517					$	(23)

			Preferred Stock												Right to Recover for Covered Losses
			Series B						Series C
			(in millions)
Balance as of September 30, 2020			$	1,106					$	1,543					$	(39)
VE territory covered losses incurred(1)			—						—						(38)
Recovery through conversion rate adjustment(2)			(35)						(20)						53
Balance as of June 30, 2021			$	1,071					$	1,523					$	(24)

(1)VE territory covered losses incurred reflect settlements with merchants and additional legal costs. See Note 13—Legal Matters.

(2)Adjustment to right to recover for covered losses for the conversion rate adjustment differs from the actual recovered amount due to differences in foreign exchange rates between the time the losses were incurred and the subsequent recovery through the conversion rate adjustment.

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

The following table presents the as-converted value of the preferred stock available to recover VE territory covered losses compared to the book value of preferred stock recorded in stockholders’ equity within the Company’s consolidated balance sheets:

			June 30, 2022												September 30, 2021
			As-converted Value of Preferred Stock**(1),(2)**						Book Value of Preferred Stock**(1)**						As-converted Value of Preferred Stock**(1),(3)**						Book Value of Preferred Stock**(1)**
			(in millions)
Series B preferred stock			$	2,957					$	936					$	3,493					$	1,071
Series C preferred stock			4,241						1,517						4,806						1,523
Total			7,198						2,453						8,299						2,594
Less: right to recover for covered losses			(23)						(23)						(133)						(133)
Total recovery for covered losses available			$	7,175					$	2,430					$	8,166					$	2,461

(1)Figures in the table may not recalculate exactly due to rounding. As-converted and book values are based on unrounded numbers.

(2)As of June 30, 2022, the as-converted value of preferred stock is calculated as the product of: (a) 2 million and 3 million shares of the series B and C preferred stock outstanding, respectively; (b) 6.055 and 6.824, the class A common stock conversion rate applicable to the series B and C preferred stock outstanding, respectively; and (c) $196.89, Visa’s class A common stock closing stock price.

(3)As of September 30, 2021, the as-converted value of preferred stock is calculated as the product of: (a) 2 million and 3 million shares of the series B and C preferred stock outstanding, respectively; (b) 6.321 and 6.834, the class A common stock conversion rate applicable to the series B and C preferred stock outstanding, respectively; and (c) $222.75, Visa’s class A common stock closing stock price.

As required by the litigation management deed, on June 21, 2022, the sixth anniversary of the Visa Europe acquisition, Visa, in consultation with the VE territories litigation management committee, carried out a release assessment. After the completion of this assessment, the Company announced on July 8, 2022 that it will release approximately $3.5 billion of the as-converted value from its series B and C preferred stock and will issue approximately 176,853 shares of series A preferred stock on July 29, 2022 (the “Sixth Anniversary Release”). Each holder of a share of series B and C preferred stock will receive a number of series A preferred stock equal to the applicable conversion adjustment divided by 100. The Company will pay cash in lieu of issuing fractional shares of series A preferred stock. Each share of series A preferred stock will be automatically converted into 100 shares of class A common stock in connection with a sale to a person eligible to hold class A common stock in accordance with Visa’s certificate of incorporation. Effective July 29, 2022, the release will result in a downward adjustment to the series B and C conversion rates of 3.084 and 3.179, respectively.

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Note 6—Fair Value Measurements and Investments

Assets and Liabilities Measured at Fair Value on a Recurring Basis

			Fair Value Measurements Using Inputs Considered as
			Level 1												Level 2
			June 30, 2022						September 30, 2021						June 30, 2022						September 30, 2021
			(in millions)
Assets
Cash equivalents and restricted cash equivalents:
Money market funds			$	10,894					$	11,779					$	—					$	—
U.S. government-sponsored debt securities			—						—						—						100
U.S. Treasury securities			700						2,400						—						—
Investment securities:
Marketable equity securities			564						490						—						—
U.S. government-sponsored debt securities			—						—						15						245
U.S. Treasury securities			4,920						2,985						—						—
Other current and non-current assets:
Money market funds			4						4						—						—
Derivative instruments			—						—						764						410
Total			$	17,082					$	17,658					$	779					$	755
Liabilities
Accrued compensation and benefits:
Deferred compensation liability			$	153					$	167					$	—					$	—
Accrued and other liabilities:
Derivative instruments			—						—						292						109
Total			$	153					$	167					$	292					$	109

Level 1 assets and liabilities. Money market funds, marketable equity securities and U.S. Treasury securities are classified as Level 1 within the fair value hierarchy, as fair value is based on unadjusted quoted prices in active markets for identical assets. The Company’s deferred compensation liability is measured at fair value based on marketable equity securities held under the deferred compensation plan.

Level 2 assets and liabilities. The fair value of U.S. government-sponsored debt securities, as provided by third-party pricing vendors, is based on quoted prices in active markets for similar, not identical, assets. Derivative instruments are valued using inputs that are observable in the market or can be derived principally from or corroborated by observable market data.

U.S. government-sponsored debt securities and U.S. Treasury securities. As of June 30, 2022 and September 30, 2021, gross unrealized gains and losses were not material. As of June 30, 2022, $3.4 billion of the Company’s debt securities are due within one year and $2.2 billion is due between one to five years.

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Assets Measured at Fair Value on a Non-recurring Basis

Non-marketable equity securities. The Company’s non-marketable equity securities are investments in privately held companies without readily determinable market values. These investments are classified as Level 3 due to the absence of quoted market prices, the inherent lack of liquidity and the fact that inputs used to measure fair value are unobservable and require management’s judgment.

The following table summarizes the total carrying value of the Company’s non-marketable equity securities held as of June 30, 2022 including cumulative unrealized gains and losses:

			June 30, 2022
			(in millions)
Initial cost basis			$	722
Adjustments:
Upward adjustments			810
Downward adjustments (including impairment)			(350)
Carrying amount, end of period			$	1,182

Unrealized gains and losses included in the carrying value of the Company’s non-marketable equity securities still held as of June 30, 2022 and 2021 were as follows:

			Three Months Ended June 30,												Nine Months Ended June 30,
			2022						2021						2022						2021
			(in millions)
Upward adjustments			$	5					$	180					$	231					$	323
Downward adjustments (including impairment)			$	(284)					$	—					$	(337)					$	(2)

For the three months ended June 30, 2022 and 2021, the Company recognized net unrealized losses of $278 million, and net unrealized gains of $434 million, respectively, on marketable and non-marketable equity securities still held as of quarter end. For the nine months ended June 30, 2022 and 2021, the Company recognized net unrealized losses of $262 million and net unrealized gains of $610 million, respectively, on marketable and non-marketable equity securities still held as of quarter end.

Non-financial assets and liabilities. Certain non-financial assets such as goodwill, intangible assets and property, equipment and technology are only recognized at fair value if they are deemed to be impaired. The Company performed its annual impairment review of its indefinite-lived intangible assets and goodwill as of February 1, 2022, and concluded there was no impairment as of that date. As of June 30, 2022, there were no impairment indicators.

Other Fair Value Disclosures

Debt. Debt instruments are measured at amortized cost on the Company’s unaudited consolidated balance sheets. The fair value of the debt instruments, as provided by third-party pricing vendors, is based on quoted prices in active markets for similar, not identical, assets. If measured at fair value in the financial statements, these instruments would be classified as Level 2 in the fair value hierarchy. As of June 30, 2022, the carrying value and estimated fair value of debt was $23.8 billion and $22.5 billion, respectively. As of September 30, 2021, the carrying value and estimated fair value of debt was $21.0 billion and $22.5 billion, respectively.

Other financial instruments not measured at fair value. At June 30, 2022, the carrying values of settlement receivable and payable and customer collateral approximate fair value due to their generally short maturities. If measured at fair value in the financial statements, these financial instruments would be classified as Level 2 in the fair value hierarchy.

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Note 7—Debt

The Company had outstanding debt as follows:

			June 30, 2022						September 30, 2021						Effective Interest Rate**(1)**
			(in millions, except percentages)
U.S. dollar notes
2.15% Senior Notes due September 2022			$	1,000					$	1,000					2.30		%
2.80% Senior Notes due December 2022			2,250						2,250						2.89		%
3.15% Senior Notes due December 2025			4,000						4,000						3.26		%
1.90% Senior Notes due April 2027			1,500						1,500						2.02		%
0.75% Senior Notes due August 2027			500						500						0.84		%
2.75% Senior Notes due September 2027			750						750						2.91		%
2.05% Senior Notes due April 2030			1,500						1,500						2.13		%
1.10% Senior Notes due February 2031			1,000						1,000						1.20		%
4.15% Senior Notes due December 2035			1,500						1,500						4.23		%
2.70% Senior Notes due April 2040			1,000						1,000						2.80		%
4.30% Senior Notes due December 2045			3,500						3,500						4.37		%
3.65% Senior Notes due September 2047			750						750						3.73		%
2.00% Senior Notes due August 2050			1,750						1,750						2.09		%
Euro notes
1.50% Senior Notes due June 2026			1,423						—						1.71		%
2.00% Senior Notes due June 2029			1,054						—						2.13		%
2.375% Senior Notes due June 2034			685						—						2.53		%
Total debt			24,162						21,000
Unamortized discounts and debt issuance costs			(181)						(161)
Hedge accounting fair value adjustments(2)			(186)						138
Total carrying value of debt			$	23,795					$	20,977
Reported as:
Current maturities of debt			$	3,249					$	999
Long-term debt			20,546						19,978
Total carrying value of debt			$	23,795					$	20,977

(1)Effective interest rates disclosed do not reflect hedge accounting adjustments.

(2)Represents the change in fair value of interest rate swap agreements entered into on a portion of the outstanding senior notes.

Senior Notes

In June 2022, the Company issued Euro-denominated fixed-rate senior notes in a public offering in an aggregate principal amount of €3.0 billion ($3.2 billion), with maturities ranging between 4 and 12 years. The June 2026 Notes, 2029 Notes and 2034 Notes, or collectively, the "Euro Notes", have interest rates of 1.50%, 2.00% and 2.375%, respectively. Interest on the Euro Notes is payable annually on June 15 of each year, commencing June 15, 2023. The net aggregate proceeds, after deducting discounts and debt issuance costs, were approximately €3.0 billion ($3.2 billion). The Company plans to use the net proceeds for general corporate purposes, which may include, among other things, the refinancing of existing indebtedness.

The Company’s outstanding senior notes, or collectively, the “Notes”, are senior unsecured obligations of the Company, ranking equally and ratably among themselves and with the Company’s existing and future unsecured and unsubordinated debt. The Notes are not secured by any assets of the Company and are not guaranteed by any of the Company’s subsidiaries. As of June 30, 2022, the Company was in compliance with all related covenants. Each series of Notes may be redeemed as a whole or in part at the Company’s option at any time at specified

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

redemption prices. In addition, each series of the Euro Notes may be redeemed as a whole at specified redemption prices upon the occurrence of certain U.S. tax events.

Non-derivative Financial Instrument Designated as a Net Investment Hedge

The Company designated €1.2 billion of the €3.0 billion Euro Notes, a non-derivative financial instrument, as a hedge against a portion of the Company’s Euro-denominated net investment in Visa Europe. Changes in the value of the designated portion of the Euro Notes, attributable to the change in exchange rates at the end of each reporting period, partially offset the foreign currency translation adjustments resulting from the Euro-denominated net investment, are reported as a component of accumulated other comprehensive income or loss on the Company’s consolidated balance sheets.

Commercial Paper Program

Visa maintains a commercial paper program to support its working capital requirements and for other general corporate purposes. Under the program, the Company is authorized to issue up to $3.0 billion in outstanding notes, with maturities up to 397 days from the date of issuance. During the three months ended June 30, 2022, the Company repaid $300 million and $650 million of commercial paper that was issued in March 2022 and April 2022, respectively. The Company had no outstanding obligations under the program as of June 30, 2022 and September 30, 2021.

Note 8—Settlement Guarantee Management

The Company indemnifies its clients for settlement losses suffered due to failure of any other client to fund its settlement obligations in accordance with the Visa operating rules. This indemnification creates settlement risk for the Company due to the difference in timing between the date of a payment transaction and the date of subsequent settlement.

Historically, the Company has experienced minimal losses as a result of its settlement risk guarantee. However, the Company’s future obligations, which could be material under its guarantees, are not determinable as they are dependent upon future events.

The Company’s settlement exposure is limited to the amount of unsettled Visa payment transactions at any point in time, which vary significantly day to day. During the nine months ended June 30, 2022, the Company’s maximum daily settlement exposure was $116.3 billion and the average daily settlement exposure was $71.8 billion.

The Company maintains and regularly reviews global settlement risk policies and procedures to manage settlement exposure, which may require clients to post collateral if certain credit standards are not met. The Company held the following collateral to manage settlement exposure:

			June 30, 2022						September 30, 2021
			(in millions)
Restricted cash and restricted cash equivalents			$	2,261					$	2,260
Pledged securities at market value			300						254
Letters of credit			1,622						1,518
Guarantees			706						758
Total			$	4,889					$	4,790

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Note 9—Stockholders’ Equity

As-converted class A common stock. The number of shares of each series and class, and the number of shares of class A common stock on an as-converted basis were as follows:

			June 30, 2022																		September 30, 2021
			Shares Outstanding						Conversion Rate Into Class A Common Stock						As-converted Class A Common Stock**(1)**						Shares Outstanding						Conversion Rate Into Class A Common Stock						As-converted Class A Common Stock**(1)**
			(in millions, except conversion rate)
Series A preferred stock			—			(2)			100.0000						6						—			(2)			100.0000						7
Series B preferred stock			2						6.0550						15						2						6.3210						16
Series C preferred stock			3						6.8240						22						3						6.8340						22
Class A common stock(3)			1,637						—						1,637						1,677						—						1,677
Class B common stock			245						1.6059			(4)			394						245						1.6228			(4)			398
Class C common stock			10						4.0000						40						10						4.0000						41
Total															2,114																		2,161

(1)Figures in the table may not recalculate exactly due to rounding. As-converted class A common stock is calculated based on unrounded numbers.

(2)The number of shares outstanding was less than one million.

(3)Class A common stock shares outstanding reflect repurchases that settled on or before June 30, 2022 and September 30, 2021, respectively.

(4)The class B to class A common stock conversion rate is presented on a rounded basis. Conversion calculations for dividend payments are based on a conversion rate rounded to the tenth decimal.

Series A preferred stock issuance. On July 29, 2022, the Company will issue approximately 176,853 shares of series A preferred stock in connection with the Sixth Anniversary Release. See Note 5—U.S. and Europe Retrospective Responsibility Plans.

Reduction in as-converted shares. Under the terms of the U.S. retrospective responsibility plan, when the Company funds the U.S. litigation escrow account, the value of the Company’s class B common stock is subject to dilution through a downward adjustment to the conversion rate of the shares of class B common stock to shares of class A common stock. Under the terms of the Europe retrospective responsibility plan, the Company is entitled to recover VE territory covered losses through periodic adjustments to the class A common stock conversion rates applicable to the series B and C preferred stock. The deposit and recovery have the same economic effect on earnings per share as repurchasing the Company’s class A common stock, because it reduces the class B common stock and the series B and C preferred stock conversion rates and consequently, reduces the as-converted class A common stock share count. See Note 5—U.S. and Europe Retrospective Responsibility Plans.

The following table presents the reduction in the number of as-converted class B common stock after deposit into the U.S. litigation escrow account for the nine months ended June 30, 2022. There was no comparable adjustment recorded for class B common stock for the nine months ended June 30, 2021.

			Nine Months Ended June 30, 2022
			(in millions, except per share data)
Reduction in equivalent number of class A common stock			4
Effective price per share(1)			$	205.06
Deposits under the U.S. retrospective responsibility plan			$	850

(1)Effective price per share is calculated using the volume-weighted average price of the Company’s class A common stock over a pricing period in accordance with the Company’s current certificate of incorporation. Effective price per share for the fiscal year is calculated using the weighted-average effective prices of the respective adjustments made during the year.

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

The following table presents the reduction in the number of as-converted series B and C preferred stock after the Company recovered VE territory covered losses through conversion rate adjustments:

			Nine Months Ended June 30, 2022												Nine Months Ended June 30, 2021
			Series B						Series C						Series B						Series C
			(in millions, except per share data)
Reduction in equivalent number of class A common stock			1						—			(1)			—			(1)			—			(1)
Effective price per share(2)			$	203.08					$	202.55					$	220.84					$	220.71
Recovery through conversion rate adjustment			$	135					$	6					$	35					$	20

(1)The reduction in equivalent number of shares of class A common stock was less than one million shares.

(2)Effective price per share for the quarter is calculated using the volume-weighted average price of the Company’s class A common stock over a pricing period in accordance with the Company’s current certificates of designations for its series B and C preferred stock. Effective price per share for each fiscal year is calculated using the weighted-average effective prices of the respective adjustments made during the year.

Common stock repurchases. The following table presents share repurchases in the open market:

			Three Months Ended June 30,												Nine Months Ended June 30,
			2022						2021						2022						2021
			(in millions, except per share data)
Shares repurchased in the open market(1)			12						10						46						27
Average repurchase price per share(2)			$	202.81					$	227.11					$	208.30					$	213.02
Total cost(2)			$	2,433					$	2,200					$	9,486					$	5,709

(1)Shares repurchased in the open market reflect repurchases that settled during the three and nine months ended June 30, 2022 and 2021, respectively. All shares repurchased in the open market have been retired and constitute authorized but unissued shares.

(2)Figures in the table may not recalculate exactly due to rounding. Average repurchase price per share and total cost are calculated based on unrounded numbers.

In December 2021, the Company’s board of directors authorized a $12.0 billion share repurchase program (the “December 2021 Program”). Previously, in January 2021, the Company’s board of directors authorized an $8.0 billion share repurchase program. These authorizations have no expiration date. As of June 30, 2022, the Company’s repurchase program had remaining authorized funds of $7.3 billion. All share repurchase programs authorized prior to the December 2021 Program have been completed.

Dividends. The Company declared and paid dividends of $798 million and $698 million during the three months ended June 30, 2022 and 2021, respectively, and $2.4 billion and $2.1 billion during the nine months ended June 30, 2022 and 2021, respectively. On July 22, 2022, the Company’s board of directors declared a quarterly cash dividend of $0.375 per share of class A common stock (determined in the case of class B and C common stock and series A, B and C preferred stock on an as-converted basis), which will be paid on September 1, 2022, to all holders of record as of August 12, 2022.

Note 10—Earnings Per Share

Basic earnings per share is computed by dividing net income available to each class of shares by the weighted-average number of shares of common stock outstanding and participating securities during the period. Participating securities include the Company’s series A, B and C preferred stock and restricted stock units (“RSUs”) that contain non-forfeitable rights to dividends or dividend equivalents. Net income is allocated to each class of common stock and participating securities based on its proportional ownership on an as-converted basis. The weighted-average number of shares outstanding of each class of common stock reflects changes in ownership over the periods presented. See Note 9—Stockholders’ Equity.

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Diluted earnings per share is computed by dividing net income available by the weighted-average number of shares of common stock outstanding, participating securities and, if dilutive, potential class A common stock equivalent shares outstanding during the period. Dilutive class A common stock equivalents may consist of: (1) shares of class A common stock issuable upon the conversion of series A, B and C preferred stock and class B and C common stock based on the conversion rates in effect through the period, and (2) incremental shares of class A common stock calculated by applying the treasury stock method to the assumed exercise of employee stock options, the assumed purchase of stock under the Company’s Employee Stock Purchase Plan and the assumed vesting of unearned performance shares.

The following table presents earnings per share for the three months ended June 30, 2022:

			Basic Earnings Per Share																		Diluted Earnings Per Share
			Income Allocation (A)****(1)						Weighted- Average Shares Outstanding (B)						Earnings per Share = (A)/(B)****(2)						Income Allocation (A)****(1)						Weighted- Average Shares Outstanding (B)						Earnings per Share = (A)/(B)****(2)
			(in millions, except per share data)
Class A common stock			$	2,634					1,642						$	1.60					$	3,411					2,129			(3)			$	1.60
Class B common stock			637						245						$	2.59					$	636					245						$	2.59
Class C common stock			64						10						$	6.42					$	64					10						$	6.41
Participating securities			76						Not presented						Not presented						$	76					Not presented						Not presented
Net income			$	3,411

The following table presents earnings per share for the nine months ended June 30, 2022:

			Basic Earnings Per Share																		Diluted Earnings Per Share
			Income Allocation (A)****(1)						Weighted- Average Shares Outstanding (B)						Earnings per Share = (A)/(B)****(2)						Income Allocation (A)****(1)						Weighted- Average Shares Outstanding (B)						Earnings per Share = (A)/(B)****(2)
			(in millions, except per share data)
Class A common stock			$	8,518					1,655						$	5.15					$	11,017					2,143			(3)			$	5.14
Class B common stock			2,046						245						$	8.33					$	2,044					245						$	8.33
Class C common stock			207						10						$	20.58					$	207					10						$	20.56
Participating securities			246						Not presented						Not presented						$	246					Not presented						Not presented
Net income			$	11,017

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

The following table presents earnings per share for the three months ended June 30, 2021:

			Basic Earnings Per Share																		Diluted Earnings Per Share
			Income Allocation (A)****(1)						Weighted- Average Shares Outstanding (B)						Earnings per Share = (A)/(B)****(2)						Income Allocation (A)****(1)						Weighted- Average Shares Outstanding (B)						Earnings per Share = (A)/(B)****(2)
			(in millions, except per share data)
Class A common stock			$	1,996					1,691						$	1.18					$	2,575					2,184			(3)			$	1.18
Class B common stock			470						245						$	1.92					$	470					245						$	1.91
Class C common stock			49						10						$	4.72					$	49					10						$	4.72
Participating securities			60						Not presented						Not presented						$	60					Not presented						Not presented
Net income			$	2,575

The following table presents earnings per share for the nine months ended June 30, 2021:

			Basic Earnings Per Share																		Diluted Earnings Per Share
			Income Allocation (A)****(1)						Weighted- Average Shares Outstanding (B)						Earnings per Share = (A)/(B)****(2)						Income Allocation (A)****(1)						Weighted- Average Shares Outstanding (B)						Earnings per Share = (A)/(B)****(2)
			(in millions, except per share data)
Class A common stock			$	6,748					1,693						$	3.99					$	8,727					2,192			(3)			$	3.98
Class B common stock			1,588						245						$	6.47					$	1,586					245						$	6.46
Class C common stock			169						11						$	15.94					$	169					11						$	15.92
Participating securities			222						Not presented						Not presented						$	221					Not presented						Not presented
Net income			$	8,727

(1)The weighted-average number of shares of as-converted class B common stock used in the income allocation was 397 million for the three months ended June 30, 2022 and 398 million for nine months ended June 30, 2022 and three and nine months ended June 30, 2021. The weighted-average number of shares of as-converted class C common stock used in the income allocation was 40 million for the three and nine months ended June 30, 2022 and 42 million for the three and nine months ended June 30, 2021. The weighted-average number of shares of preferred stock included within participating securities was 6 million of as-converted series A preferred stock for the three and nine months ended June 30, 2022 and 9 million and 14 million of as-converted series A preferred stock for the three and nine months ended June 30, 2021, respectively, 15 million of as-converted series B preferred stock for the three months ended June 30, 2022 and 16 million of as-converted series B preferred stock for the nine months ended June 30, 2022 and three and nine months ended June 30, 2021 and 22 million of as-converted series C preferred stock for the three and nine months ended June 30, 2022 and 2021.

(2)Figures in the table may not recalculate exactly due to rounding. Basic and diluted earnings per share is calculated based on unrounded numbers.

(3)Weighted-average diluted shares outstanding are calculated on an as-converted basis and include incremental common stock equivalents, as calculated under the treasury stock method. The common stock equivalents are not material for the three and nine months ended June 30, 2022 and 2021.

Note 11—Share-based Compensation

The Company granted the following equity awards to employees and non-employee directors under the 2007 Equity Incentive Compensation Plan, or the EIP, during the nine months ended June 30, 2022:

			Granted						Weighted-Average Grant Date Fair Value						Weighted-Average Exercise Price
Non-qualified stock options			961,570						$	43.16					$	200.86
Restricted stock units			3,413,085						$	203.22
Performance-based shares(1)			440,722						$	186.50

(1)Represents the maximum number of performance-based shares which could be earned.

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Related to the EIP, the Company recorded share-based compensation cost, net of estimated forfeitures, of $145 million and $153 million for the three months ended June 30, 2022 and 2021, respectively, and $447 million and $417 million for the nine months ended June 30, 2022 and 2021, respectively.

Note 12—Income Taxes

For the three and nine months ended June 30, 2022, the effective income tax rates were 11% and 17%, respectively, and for the three and nine months ended June 30, 2021, the effective income tax rates were 41% and 26%, respectively. The effective tax rates for the three and nine months ended June 30, 2022 differ from the effective tax rates for the same periods in the prior year primarily due to the following:

• during the three months ended June 30, 2022, a decrease in the state apportionment rate, including a $176 million tax benefit related to prior years, as a result of a tax position taken related to a recent ruling;

• during the three months ended June 30, 2021, a $1.0 billion non-recurring, non-cash tax expense related to the remeasurement of UK deferred tax liabilities;

• during the three months ended June 30, 2021, a $51 million tax benefit as a result of a tax position taken on certain expenses; and

• during the nine months ended June 30, 2021, $147 million of tax benefits as a result of the conclusion of audits by taxing authorities.

During the three and nine months ended June 30, 2022, the Company’s gross unrecognized tax benefits decreased by $34 million and increased by $109 million, respectively. The Company’s net unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate, decreased by $75 million and $29 million, respectively. The change in unrecognized tax benefits is primarily related to the change in state apportionment mentioned above, partially offset by an increase in gross timing differences as well as various tax positions across several jurisdictions. During the three and nine months ended June 30, 2022, the Company’s accrued penalties related to uncertain tax positions decreased by $31 million.

The Company’s tax filings are subject to examination by U.S. federal, state and foreign taxing authorities. The timing and outcome of the final resolutions of the various ongoing income tax examinations are highly uncertain. It is not reasonably possible to estimate the increase or decrease in unrecognized tax benefits within the next twelve months.

Note 13—Legal Matters

The Company is party to various legal and regulatory proceedings. Some of these proceedings involve complex claims that are subject to substantial uncertainties and unascertainable damages. Accordingly, except as disclosed, the Company has not established reserves or ranges of possible loss related to these proceedings, as at this time in the proceedings, the matters do not relate to a probable loss and/or the amount or range of losses are not reasonably estimable. Although the Company believes that it has strong defenses for the litigation and regulatory proceedings described below, it could, in the future, incur judgments or fines or enter into settlements of claims that could have a material adverse effect on the Company’s financial position, results of operations or cash flows. From time to time, the Company may engage in settlement discussions or mediations with respect to one or more of its outstanding litigation matters, either on its own behalf or collectively with other parties.

The litigation accrual is an estimate and is based on management’s understanding of its litigation profile, the specifics of each case, advice of counsel to the extent appropriate and management’s best estimate of incurred loss as of the balance sheet date.

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

The following table summarizes the activity related to accrued litigation:

			Nine Months Ended June 30,
			2022						2021
			(in millions)
Balance at beginning of period			$	983					$	914
Provision for uncovered legal matters			2						5
Provision for covered legal matters			878						23
Payments for legal matters			(377)						(42)
Balance at end of period			$	1,486					$	900

Accrual Summary—U.S. Covered Litigation

Visa Inc., Visa U.S.A. and Visa International are parties to certain legal proceedings that are covered by the U.S. retrospective responsibility plan, which the Company refers to as the U.S. covered litigation. An accrual for the U.S. covered litigation and a charge to the litigation provision are recorded when a loss is deemed to be probable and reasonably estimable. In making this determination, the Company evaluates available information, including but not limited to actions taken by the Company’s litigation committee. The total accrual related to the U.S. covered litigation could be either higher or lower than the escrow account balance. See further discussion below under U.S. Covered Litigation and Note 5—U.S. and Europe Retrospective Responsibility Plans.

The following table summarizes the accrual activity related to U.S. covered litigation:

			Nine Months Ended June 30,
			2022						2021
			(in millions)
Balance at beginning of period			$	881					$	888
Provision for interchange multidistrict litigation			861						—
Payments for U.S. covered litigation			(262)						(7)
Balance at end of period			$	1,480					$	881

During the three and nine months ended June 30, 2022, the Company recorded additional accruals of $716 million and $861 million, respectively, and deposited $600 million and $850 million, respectively, into the U.S. litigation escrow account to address claims of certain merchants who opted out of the Amended Settlement Agreement. The U.S. covered litigation accrual balance is consistent with the Company’s estimate of its share of the lower end of a probable and reasonably estimable loss with respect to U.S. covered litigation. While this estimate is consistent with the Company’s view of the current status of the litigation, the probable and reasonably estimable loss or range of such loss could materially vary based on developments in the litigation. The Company will continue to consider and reevaluate this estimate in light of the substantial uncertainties with respect to the litigation. The Company is unable to estimate a potential loss or range of loss, if any, at trial if negotiated resolutions cannot be reached.

Accrual Summary—VE Territory Covered Litigation

Visa Inc., Visa International and Visa Europe are parties to certain legal proceedings that are covered by the Europe retrospective responsibility plan. Unlike the U.S. retrospective responsibility plan, the Europe retrospective responsibility plan does not have an escrow account that is used to fund settlements or judgments. The Company is entitled to recover VE territory covered losses through periodic adjustments to the conversion rates applicable to the series B and C preferred stock. An accrual for the VE territory covered losses and a reduction to stockholders’ equity will be recorded when the loss is deemed to be probable and reasonably estimable. See further discussion below under VE Territory Covered Litigation and Note 5—U.S. and Europe Retrospective Responsibility Plans.

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

The following table summarizes the accrual activity related to VE territory covered litigation:

			Nine Months Ended June 30,
			2022						2021
			(in millions)
Balance at beginning of period			$	102					$	21
Provision for VE territory covered litigation			17						23
Payments for VE territory covered litigation			(114)						(29)
Balance at end of period			$	5					$	15

U.S. Covered Litigation

Interchange Multidistrict Litigation (MDL) - Putative Class Actions

On July 18, 2022, in response to an order from the U.S. Court of Appeals for the Second Circuit, the district court certified its final approval of the Amended Settlement Agreement as a partial final judgment.

Interchange Multidistrict Litigation (MDL) - Individual Merchant Actions

Visa has reached settlements with a number of merchants representing approximately 55% of the Visa-branded payment card sales volume of merchants who opted out of the Amended Settlement Agreement with the Damages Class plaintiffs.

VE Territory Covered Litigation

Europe Merchant Litigation

Since July 2013, in excess of 850 Merchants (the capitalized term “Merchant,” when used in this section, means a merchant together with subsidiary/affiliate companies that are party to the same claim) have commenced proceedings against Visa Europe, Visa Inc. and other Visa subsidiaries in the UK, Belgium, Poland and Israel primarily relating to interchange rates in Europe and in some cases relating to fees charged by Visa and certain Visa rules. As of the filing date, Visa has settled the claims asserted by over 150 Merchants, leaving more than 650 Merchants with outstanding claims. In addition, over 30 additional Merchants have threatened to commence similar proceedings. Standstill agreements have been entered into with respect to some of those threatened Merchant claims, several of which have been settled.

On November 26, 2021, with respect to certain pending Merchant claims, the UK Competition Appeal Tribunal (CAT) found that UK and certain other domestic and intra-European Economic Area consumer interchange fees before the introduction of the Interchange Fee Regulation (IFR) were a restriction of competition, but that the question of whether those fees, along with inter-European Economic Area fees, are a restriction of competition after the introduction of the IFR would need to be resolved at trial. Whether any interchange fees are exempt from the finding of restriction under applicable law and the assessment of damages, if any, will also need to be considered at trial. On February 1, 2022, the UK Court of Appeal granted claimants permission to appeal the CAT’s ruling and an appeal hearing is scheduled for July 2022.

On June 1, 2022, two class action claims were filed against Visa with the CAT on behalf of UK businesses that accepted Visa-branded payment cards at any time from June 1, 2016 alleging that UK domestic, intra-European Economic Area, and inter-regional interchange fees on commercial credit cards, and inter-regional interchange fees on consumer cards, are anti-competitive. The Europe retrospective responsibility plan covers liabilities and losses relating to the covered period, which generally refers to the period before the closing of the Visa Europe acquisition.

Other Litigation

On July 3, 2022, Visa filed a motion challenging jurisdiction in the action filed against Visa and MasterCard in the Israel Central District Court.

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Other Litigation

Pulse Network

On April 5, 2022, the U.S. Court of Appeals for the Fifth Circuit reversed, in part, the district court’s summary judgment decision in Visa's favor, finding that Pulse has standing to pursue certain of its claims, and remanded the case to the district court for further proceedings.

German ATM Litigation

Between December 2021 and June 2022, Visa was served with claims in Germany brought by German savings banks against Visa Europe and Visa Inc. The banks claim that Visa’s ATM rules prohibiting the charging of access fees on domestic cash withdrawals are anti-competitive and they are seeking damages. Visa has filed challenges to the jurisdiction of the German courts to hear these claims.

Foreign Currency Exchange Rate Litigation

On December 6, 2021, an amended complaint making similar allegations regarding the setting of foreign exchange rates was filed by several individuals on behalf of a nationwide class, and/or California, Washington, Massachusetts or New Jersey subclasses, of cardholders who made a transaction in a foreign currency. The amended complaint asserts claims for unjust enrichment and restitution as well as violations of the California Unfair Competition Law, the Washington Consumer Protection Act, the Massachusetts Consumer Protection Act, and the New Jersey Consumer Fraud Act. On January 19, 2022, Visa filed a motion to dismiss the amended complaint.