Visa 10-Q 2023-06-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-33977

VISA INC.

(Exact name of Registrant as specified in its charter)

Delaware									26-0267673
(State or other jurisdiction of incorporation or organization)									(IRS Employer Identification No.)
P.O. Box 8999									94128-8999
San Francisco,			California
(Address of principal executive offices)									(Zip Code)

(650) 432-3200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class						Trading Symbol						Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share						V						New York Stock Exchange
1.500% Senior Notes due 2026						V26						New York Stock Exchange
2.000% Senior Notes due 2029						V29						New York Stock Exchange
2.375% Senior Notes due 2034						V34						New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer			☑						Accelerated filer			☐
Non-accelerated filer			☐						Smaller reporting company			☐
									Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of July 19, 2023, there were 1,606,787,603 shares outstanding of the registrant’s class A common stock, par value $0.0001 per share, 245,513,385 shares outstanding of the registrant’s class B common stock, par value $0.0001 per share, and 9,539,598 shares outstanding of the registrant’s class C common stock, par value $0.0001 per share.

Table of Contents

VISA INC.

TABLE OF CONTENTS

						Page
PART I.			Financial Information			3
Item 1.			Financial Statements (Unaudited)			3
			Consolidated Balance Sheets—June 30, 2023 and September 30, 2022			3
			Consolidated Statements of Operations—Three and Nine Months Ended June 30, 2023 and 2022			4
			Consolidated Statements of Comprehensive Income—Three and Nine Months Ended June 30, 2023 and 2022			5
			Consolidated Statements of Changes in Equity—Three and Nine Months Ended June 30, 2023 and 2022			6
			Consolidated Statements of Cash Flows—Nine Months Ended June 30, 2023 and 2022			10
			Notes to Consolidated Financial Statements (Unaudited)			11
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			28
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			38
Item 4.			Controls and Procedures			38
PART II.			Other Information			39
Item 1.			Legal Proceedings			39
Item 1A.			Risk Factors			39
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			40
Item 3.			Defaults Upon Senior Securities			40
Item 4.			Mine Safety Disclosures			40
Item 5.			Other Information			40
Item 6.			Exhibits			41
			Signatures			42

Table of Contents

PART I. FINANCIAL INFORMATION

VISA INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

			June 30, 2023						September 30, 2022
			(in millions, except per share data)
Assets
Cash and cash equivalents			$	15,590					$	15,689
Restricted cash equivalents—U.S. litigation escrow			1,627						1,449
Investment securities			3,166						2,833
Settlement receivable			2,454						1,932
Accounts receivable			2,282						2,020
Customer collateral			2,907						2,342
Current portion of client incentives			1,525						1,272
Prepaid expenses and other current assets			2,119						2,668
Total current assets			31,670						30,205
Investment securities			2,122						2,136
Client incentives			3,811						3,348
Property, equipment and technology, net			3,370						3,223
Goodwill			18,082						17,787
Intangible assets, net			26,576						25,065
Other assets			3,603						3,737
Total assets			$	89,234					$	85,501
Liabilities
Accounts payable			$	281					$	340
Settlement payable			3,675						3,281
Customer collateral			2,907						2,342
Accrued compensation and benefits			1,215						1,359
Client incentives			7,532						6,099
Accrued liabilities			4,075						3,726
Current maturities of debt			—						2,250
Accrued litigation			1,545						1,456
Total current liabilities			21,230						20,853
Long-term debt			20,560						20,200
Deferred tax liabilities			5,380						5,332
Other liabilities			3,083						3,535
Total liabilities			50,253						49,920
Equity
Series A, Series B and Series C convertible participating preferred stock (preferred stock), $0.0001 par value: 25 shares authorized and 5 (Series A less than one, Series B 2, Series C 3) shares issued and outstanding			1,786						2,324
Class A, Class B and Class C common stock and additional paid-in capital, $0.0001 par value: 2,003,341 shares authorized (Class A 2,001,622, Class B 622, Class C 1,097); 1,862 (Class A 1,607, Class B 245, Class C 10) and 1,890 (Class A 1,635, Class B 245, Class C 10) shares issued and outstanding			20,290						19,545
Right to recover for covered losses			(25)						(35)
Accumulated income			17,908						16,116
Accumulated other comprehensive income (loss), net:
Investment securities			(80)						(106)
Defined benefit pension and other postretirement plans			(158)						(169)
Derivative instruments			(259)						418
Foreign currency translation adjustments			(481)						(2,512)
Total accumulated other comprehensive income (loss), net			(978)						(2,369)
Total equity			38,981						35,581
Total liabilities and equity			$	89,234					$	85,501

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

Table of Contents

VISA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED**)**

			Three Months Ended June 30,												Nine Months Ended June 30,
			2023						2022						2023						2022
			(in millions, except per share data)
Net revenues			$	8,123					$	7,275					$	24,044					$	21,523
Operating Expenses
Personnel			1,481						1,283						4,333						3,634
Marketing			297						313						938						907
Network and processing			182						178						539						558
Professional fees			133						117						372						342
Depreciation and amortization			235						230						696						635
General and administrative			314						289						918						856
Litigation provision			457						717						798						865
Total operating expenses			3,099						3,127						8,594						7,797
Operating income			5,024						4,148						15,450						13,726
Non-operating Income (Expense)
Interest expense			(182)						(111)						(461)						(379)
Investment income (expense) and other			304						(208)						412						(79)
Total non-operating income (expense)			122						(319)						(49)						(458)
Income before income taxes			5,146						3,829						15,401						13,268
Income tax provision			990						418						2,809						2,251
Net income			$	4,156					$	3,411					*

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This management’s discussion and analysis provides a review of the results of operations, financial condition and liquidity and capital resources of Visa Inc. and its subsidiaries (Visa, we, us, our or the Company) on a historical basis and outlines the factors that have affected recent earnings, as well as those factors that may affect future earnings. The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and related notes included in Item 1—Financial Statements of this report.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that relate to, among other things, the impact on our future financial position, results of operations and cash flows as a result of the war in Ukraine; the ongoing effects of the COVID-19 pandemic, including the resumption of international travel; prospects, developments, strategies and growth of our business; anticipated expansion of our products in certain countries; industry developments; anticipated timing and benefits of our acquisitions; expectations regarding litigation matters, investigations and proceedings; timing and amount of stock repurchases; sufficiency of sources of liquidity and funding; effectiveness of our risk management programs; and expectations regarding the impact of recent accounting pronouncements on our consolidated financial statements. Forward-looking statements generally are identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “projects,” “could,” “should,” “will,” “continue” and other similar expressions. All statements other than statements of historical fact could be forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, many of which are beyond our control and are difficult to predict. We describe risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, any of these forward-looking statements in our SEC filings, including our Annual Report on Form 10-K, for the year ended September 30, 2022, and any subsequent reports on Forms 10-Q and 8-K. Except as required by law, we do not intend to update or revise any forward-looking statements as a result of new information, future events or otherwise.

Overview

Visa is a global payments technology company that facilitates global commerce and money movement across more than 200 countries and territories among a global set of consumers, merchants, financial institutions and government entities through innovative technologies. We provide transaction processing services (primarily authorization, clearing and settlement) to our financial institution and merchant clients through VisaNet, our advanced transaction processing network. We offer products and solutions that facilitate secure, reliable and efficient money movement for all participants in the ecosystem.

Financial overview. A summary of our as-reported U.S. GAAP and non-GAAP operating results is as follows:

			Three Months Ended June 30,																		Nine Months Ended June 30,
			2023						2022						% Change**(1)**						2023						2022						% Change**(1)**
			(in millions, except percentages and per share data)
Net revenues			$	8,123					$	7,275					12		%				$	24,044					$	21,523					12		%
Operating expenses			$	3,099					$	3,127					(1		%)				$	8,594					$	7,797					10		%
Net income			$	4,156					$	3,411					22		%				$	12,592					$	11,017					14		%
Diluted earnings per share			$	2.00					$	1.60					25		%				$	6.02					$	5.14					17		%
Non-GAAP operating expenses(2)			$	2,578					$	2,353					10		%				$	7,598					$	6,755					12		%
Non-GAAP net income(2)			$	4,499					$	4,206					7		%				$	13,464					$	11,943					13		%
Non-GAAP diluted earnings per share(2)			$	2.16					$	1.98					9		%				$	6.44					$	5.57					16		%

(1)Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.

(2)For a full reconciliation of our GAAP to non-GAAP financial results, see tables in Non-GAAP financial results below.

Disruption in the Banking Sector. During the nine months ended June 30, 2023, certain U.S. banks failed, which caused volatility in the global financial markets. These events did not have an impact on our operating results. We continuously monitor and manage balance sheet and operational risks from clients in our portfolio, including their settlement obligations.

Russia & Ukraine. During the quarter ended March 31, 2022, economic sanctions were imposed on Russia by the U.S., European Union, United Kingdom and other jurisdictions and authorities, impacting Visa and its clients. In March 2022, we suspended our operations in Russia and as a result, are no longer generating revenue from domestic and cross-border activities related to Russia. For the nine months ended June 30, 2022, total net revenues from Russia, including revenues driven by domestic as well as cross-border activities, was approximately 3% of our consolidated net revenues.

The continuing effects of the recent liquidity issues at certain financial institutions and the war in Ukraine are difficult to predict due to numerous uncertainties identified in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended September 30, 2022. We will continue to evaluate the nature and extent of the impact to our business.

Highlights for the first nine months of fiscal 2023. For the three and nine months ended June 30, 2023, net revenues increased 12% over each prior-year comparable period, primarily due to the growth in nominal cross-border volume, processed transactions and nominal payments volume, partially offset by higher client incentives. During the three and nine months ended June 30, 2023, exchange rate movements lowered our net revenues growth by approximately one percentage point and two percentage points, respectively. See Results of Operations—Net Revenues below for further discussion.

For the three months ended June 30, 2023, GAAP operating expenses decreased 1% over the prior-year comparable period, primarily due to lower litigation provision, largely offset by higher expense related to personnel. For the nine months ended June 30, 2023, GAAP operating expenses increased 10% over the prior-year comparable period, primarily due to higher expense related to personnel. See Results of Operations—Operating Expenses below for further discussion. During the nine months ended June 30, 2023, exchange rate movements lowered our operating expense growth by approximately one percentage point.

For the three and nine months ended June 30, 2023, non-GAAP operating expenses increased 10% and 12% over the prior-year comparable periods, respectively, primarily due to higher expense related to personnel. For the nine months ended June 30, 2023, non-GAAP operating expenses also included higher general and administrative expense.

Pending acquisition. In June 2023, we entered into a definitive agreement to acquire Pismo Holdings (Pismo), a cloud-native issuer processing and core banking platform with operations in Latin America, Asia Pacific and Europe, for $1.0 billion in cash. This acquisition is subject to customary closing conditions, including applicable regulatory reviews and approvals.

Interchange multidistrict litigation. During the nine months ended June 30, 2023, we recorded additional accruals of $797 million to address claims associated with the interchange multidistrict litigation. We also made deposits of $850 million into the U.S. litigation escrow account. See Note 5—U.S. and Europe Retrospective Responsibility Plans and Note 13—Legal Matters to our unaudited consolidated financial statements*.*

Common stock repurchases. In October 2022, our board of directors authorized a $12.0 billion share repurchase program*.* During the nine months ended June 30, 2023, we repurchased 39 million shares of our class A common stock in the open market for $8.4 billion. As of June 30, 2023, our repurchase program had remaining authorized funds of $8.8 billion. See Note 9—Stockholders’ Equity to our unaudited consolidated financial statements.

Non-GAAP financial results. We use non-GAAP financial measures of our performance which exclude certain items which we believe are not representative of our continuing operations, as they may be non-recurring or have no cash impact, and may distort our longer-term operating trends. We consider non-GAAP measures useful to investors because they provide greater transparency into management’s view and assessment of our ongoing operating performance.

*•*Gains and losses on equity investments. Gains and losses on equity investments include periodic non-cash fair value adjustments and gains and losses upon sale of an investment. These long-term investments are strategic in nature and are primarily private company investments. Gains and losses and the related tax impacts associated with these investments are tied to the performance of the companies that we invest in and therefore do not correlate to the underlying performance of our business.

*•*Amortization of acquired intangible assets. Amortization of acquired intangible assets consists of amortization of intangible assets such as developed technology, customer relationships and brands acquired in connection with business combinations executed beginning in fiscal 2019. Amortization charges for our acquired intangible assets are non-cash and are significantly affected by the timing, frequency and size of our acquisitions, rather than our core operations. As such, we have excluded this amount and the related tax impact to facilitate an evaluation of our current operating performance and comparison to our past operating performance.

*•*Acquisition-related costs. Acquisition-related costs consist primarily of one-time transaction and integration costs associated with our business combinations. These costs include professional fees, technology integration fees, restructuring activities and other direct costs related to the purchase and integration of acquired entities. These costs also include retention equity and deferred equity compensation when they are agreed upon as part of the purchase price of the transaction but are required to be recognized as expense post-combination. We have excluded these amounts and the related tax impacts as the expenses are recognized for a limited duration and do not reflect the underlying performance of our business.

• Litigation provision. During the three months ended June 30, 2023 and 2022, we recorded additional accruals to address claims associated with the interchange multidistrict litigation of $456 million and $716 million, respectively, and related tax benefit of $101 million and $159 million, respectively, determined by applying applicable tax rates. During the nine months ended June 30, 2023 and 2022, we recorded additional accruals to address claims associated with the interchange multidistrict litigation of $797 million and $861 million, respectively, and related tax benefit of $177 million and $191 million, respectively, determined by applying applicable tax rates. Under the U.S. retrospective responsibility plan, we recover the monetary liabilities related to the U.S. covered litigation through a downward adjustment to the rate at which shares of our class B common stock convert into shares of class A common stock. See Note 5—U.S. and Europe Retrospective Responsibility Plans and Note 13—Legal Matters to our unaudited consolidated financial statements.

• Russia-Ukraine charges. During the nine months ended June 30, 2022, we recorded a loss within general and administrative expense of $35 million from the deconsolidation of our Russian subsidiary. We also incurred charges of $25 million in personnel expense as a result of steps taken to support our employees in Russia and Ukraine. We have excluded these amounts and the related tax benefit of $4 million, determined by applying applicable tax rates, as they are one-time charges and do not reflect the underlying performance of our business.

Non-GAAP operating expenses, non-operating income (expense), income tax provision, effective income tax rate, net income and diluted earnings per share should not be relied upon as substitutes for, or considered in isolation from, measures calculated in accordance with U.S. GAAP. The following tables reconcile our as-reported financial measures, calculated in accordance with U.S. GAAP, to our respective non-GAAP financial measures:

									Three Months Ended June 30, 2023
									Operating Expenses												Non-operating Income (Expense)												Income Tax Provision						Effective Income Tax Rate**(1)**						Net Income						Diluted Earnings Per Share**(1)**
									(in millions, except percentages and per share data)
As reported									$	3,099											$	122											$	990					19.2		%				$	4,156					$	2.00
(Gains) losses on equity investments, net									—												(85)												(18)												(67)						(0.03)
Amortization of acquired intangible assets									(41)												—												9												32						0.02
Acquisition-related costs									(24)												—												1												23						0.01
Litigation provision									(456)												—												101												355						0.17
Non-GAAP									$	2,578											$	37											$	1,083					19.4		%				$	4,499					$	2.16

									Nine Months Ended June 30, 2023
									Operating Expenses												Non-operating Income (Expense)												Income Tax Provision						Effective Income Tax Rate**(1)**						Net Income						Diluted Earnings Per Share**(1)**
									(in millions, except percentages and per share data)
As reported									$	8,594											$	(49)											$	2,809					18.2		%				$	12,592					$	6.02
(Gains) losses on equity investments, net									—												111												25												86						0.04
Amortization of acquired intangible assets									(130)												—												28												102						0.05
Acquisition-related costs									(69)												—												5												64						0.03
Litigation provision									(797)												—												177												620						0.30
Non-GAAP									$	7,598											$	62											$	3,044					18.4		%				$	13,464					$	6.44

									Three Months Ended June 30, 2022
									Operating Expenses												Non-operating Income (Expense)												Income Tax Provision						Effective Income Tax Rate**(1)**						Net Income						Diluted Earnings Per Share**(1)**
									(in millions, except percentages and per share data)
As reported									$	3,127											$	(319)											$	418					10.9		%				$	3,411					$	1.60
(Gains) losses on equity investments, net									—												246												54												192						0.09
Amortization of acquired intangible assets									(44)												—												10												34						0.02
Acquisition-related costs									(14)												—												2												12						0.01
Litigation provision									(716)												—												159												557						0.26
Non-GAAP									$	2,353											$	(73)											$	643					13.3		%				$	4,206					$	1.98

									Nine Months Ended June 30, 2022
									Operating Expenses												Non-operating Income (Expense)												Income Tax Provision						Effective Income Tax Rate**(1)**						Net Income						Diluted Earnings Per Share**(1)**
									(in millions, except percentages and per share data)
As reported									$	7,797											$	(458)											$	2,251					17.0		%				$	11,017					$	5.14
(Gains) losses on equity investments, net									—												142												40												102						0.05
Amortization of acquired intangible assets									(77)												—												17												60						0.03
Acquisition-related costs									(44)												—												6												38						0.02
Litigation provision									(861)												—												191												670						0.31
Russia-Ukraine charges									(60)												—												4												56						0.03
Non-GAAP									$	6,755											$	(316)											$	2,509					17.4		%				$	11,943					$	5.57

(1)Figures in the table may not recalculate exactly due to rounding. Effective income tax rate, diluted earnings per share and their respective totals are calculated based on unrounded numbers.

Payments volume and processed transactions. Payments volume is the primary driver for our service revenues, and the number of processed transactions is the primary driver for our data processing revenues.

Payments volume represents the aggregate dollar amount of purchases made with cards and other form factors carrying the Visa, Visa Electron, V PAY and Interlink brands and excludes Europe co-badged volume. Nominal payments volume is denominated in U.S. dollars and is calculated each quarter by applying an established U.S. dollar/foreign currency exchange rate for each local currency in which our volumes are reported. Processed transactions represent transactions using cards and other form factors carrying the Visa, Visa Electron, V PAY, Interlink and PLUS brands processed on Visa’s networks.

The following table presents nominal payments and cash volume:

			U.S.																		International																		Visa Inc.
			Three Months Ended March 31,****(1)																		Three Months Ended March 31,****(1)																		Three Months Ended March 31,****(1)
			2023						2022						% Change**(2)**						2023						2022						% Change**(2)**						2023						2022						% Change**(2)**
			(in billions, except percentages)
Nominal payments volume
Consumer credit			$	530					$	487					9		%				$	697					$	658					6		%				$	1,228					$	1,145					7		%
Consumer debit(3)			699						637						10		%				654						661						(1		%)				1,353						1,298						4		%
Commercial(4)			241						214						13		%				136						122						12		%				376						335						12		%
Total nominal payments volume**(2)**			$	1,470					$	1,337					10		%				$	1,487					$	1,441					3		%				$	2,957					$	2,778					6		%
Cash volume(5)			149						143						4		%				448						462						(3		%)				596						605						(1		%)
Total nominal volume**(2),(6)**			$	1,619					$	1,480					9		%				$	1,934					$	1,903					2		%				$	3,553					$	3,383					5		%
			U.S.																		International																		Visa Inc.
			Nine Months Ended March 31,****(1)																		Nine Months Ended March 31,****(1)																		Nine Months Ended March 31,****(1)
			2023						2022						% Change**(2)**						2023						2022						% Change**(2)**						2023						2022						% Change**(2)**
			(in billions, except percentages)
Nominal payments volume
Consumer credit			$	1,650					$	1,492					11		%				$	2,078					$	2,018					3		%				$	3,728					$	3,510					6		%
Consumer debit(3)			2,088						1,929						8		%				1,954						2,087						(6		%)				4,042						4,016						1		%
Commercial(4)			735						638						15		%				403						368						9		%				1,138						1,006						13		%
Total nominal payments volume**(2)**			$	4,473					$	4,058					10		%				$	4,435					$	4,473					(1		%)				$	8,908					$	8,532					4		%
Cash volume(5)			454						475						(4		%)				1,365						1,472						(7		%)				1,820						1,947						(7		%)
Total nominal volume**(2),(6)**			$	4,927					$	4,534					9		%				$	5,800					$	5,945					(2		%)				$	10,727					$	10,479					2		%

The following table presents the change in nominal and constant payments and cash volume:

			International												Visa Inc.												International												Visa Inc.
			Three Months Ended March 31, 2023 vs. 2022**(1),(2)**												Three Months Ended March 31, 2023 vs. 2022**(1),(2)**												Nine Months Ended March 31, 2023 vs. 2022**(1),(2)**												Nine Months Ended March 31, 2023 vs. 2022**(1),(2)**
			Nominal						Constant**(7)**						Nominal						Constant**(7)**						Nominal						Constant**(7)**						Nominal						Constant**(7)**
Payments volume growth
Consumer credit growth			6		%				14		%				7		%				12		%				3		%				13		%				6		%				12		%
Consumer debit growth(3)			(1		%)				5		%				4		%				7		%				(6		%)				1		%				1		%				5		%
Commercial growth(4)			12		%				21		%				12		%				15		%				9		%				22		%				13		%				17		%
Total payments volume growth			3		%				10		%				6		%				10		%				(1		%)				8		%				4		%				9		%
Cash volume growth(5)			(3		%)				2		%				(1		%)				3		%				(7		%)				(1		%)				(7		%)				(2		%)
Total volume growth			2		%				8		%				5		%				9		%				(2		%)				6		%				2		%				7		%

(1)Service revenues in a given quarter are assessed based on nominal payments volume in the prior quarter. Therefore, service revenues reported for the three and nine months ended June 30, 2023 and 2022, respectively, were based on nominal payments volume reported by our financial institution clients for the three and nine months ended March 31, 2023 and 2022, respectively. On occasion, previously presented volume information may be updated. Prior period updates are not material.

(2)Figures in the table may not recalculate exactly due to rounding. Percentage changes and totals are calculated based on unrounded numbers.

(3)Includes consumer prepaid volume and Interlink volume.

(4)Includes large, medium and small business credit and debit, as well as commercial prepaid volume.

(5)Cash volume generally consists of cash access transactions, balance access transactions, balance transfers and convenience checks.

(6)Total nominal volume is the sum of total nominal payments volume and cash volume. Total nominal volume is provided by our financial institution clients, subject to review by Visa.

(7)Growth on a constant-dollar basis excludes the impact of foreign currency fluctuations against the U.S. dollar.

The following table presents the number of processed transactions:

			Three Months Ended June 30,																		Nine Months Ended June 30,
2023						2022						% Change**(1)**						2023						2022						% Change**(1)**
(in millions, except percentages)
Visa processed transactions			54,034						49,279						10		%				156,615						141,645						11		%

(1)Figures in the table may not recalculate exactly due to rounding. Percentage change is calculated based on unrounded numbers. On occasion, previously presented information may be updated. Prior period updates are not material.

Results of Operations

Net Revenues

The following table presents our net revenues earned in the U.S. and internationally:

			Three Months Ended June 30,																		Nine Months Ended June 30,
			2023						2022						% Change**(1)**						2023						2022						% Change**(1)**
			(in millions, except percentages)
U.S.			$	3,443					$	3,170					9		%				$	10,550					$	9,427					12		%
International			4,680						4,105						14		%				13,494						12,096						12		%
Net revenues			$	8,123					$	7,275					12		%				$	24,044					$	21,523					12		%

(1)Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.

Net revenues increased over the three and nine-month prior-year comparable periods primarily due to the growth in nominal cross-border volume, processed transactions and nominal payments volume, partially offset by higher client incentives.

Our net revenues are impacted by the overall strengthening or weakening of the U.S. dollar as payments volume and related revenues denominated in local currencies are converted to U.S. dollars. During the three and nine months ended June 30, 2023, exchange rate movements lowered our net revenues growth by approximately one percentage point and two percentage points, respectively.

The following table presents the components of our net revenues:

			Three Months Ended June 30,																		Nine Months Ended June 30,
			2023						2022						% Change**(1)**						2023						2022						% Change**(1)**
			(in millions, except percentages)
Service revenues			$	3,668					$	3,189					15		%				$	10,950					$	9,903					11		%
Data processing revenues			4,105						3,579						15		%				11,751						10,673						10		%
International transaction revenues			2,920						2,560						14		%				8,466						6,942						22		%
Other revenues			597						517						15		%				1,735						1,440						20		%
Client incentives			(3,167)						(2,570)						23		%				(8,858)						(7,435)						19		%
Net revenues			$	8,123					$	7,275					12		%				$	24,044					$	21,523					12		%

(1)Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.

*•*Service revenues increased primarily due to 6% and 4% growth in nominal payments volume over the three and nine-month prior-year comparable periods, respectively, and due to business mix. Service revenues increased over the nine month prior-year comparable period despite the impact of our suspension of operations in Russia.

*•*Data processing revenues increased primarily due to overall growth in processed transactions of 10% and 11% over the three and nine-month prior-year comparable periods, respectively, growth in value added

services and select pricing modifications. Data processing revenues increased over the nine month prior-year comparable period despite the impact of our suspension of operations in Russia.

*•*International transaction revenues increased over the three month prior-year comparable period primarily due to growth in nominal cross-border volumes of 22%, excluding transactions within Europe, and select pricing modifications, partially offset by business mix and lower volatility of a broad range of currencies. International transaction revenues increased over the nine month prior-year comparable period primarily due to growth in nominal cross-border volumes of 23%, excluding transactions within Europe, and select pricing modifications, partially offset by business mix.

• Other revenues increased over the three month prior-year comparable period primarily due to select pricing modifications and growth in value added services revenues tied to consulting services. Other revenues increased over the nine month prior-year comparable period due to growth in value added services tied to marketing and consulting services, select pricing modifications and acquisition-related revenues.

• Client incentives increased primarily due to growth in payments volume over the three and nine-month prior-year comparable periods. The amount of client incentives we record in future periods will vary based on changes in performance expectations, actual client performance, amendments to existing contracts or the execution of new contracts.

Operating Expenses

The following table presents the components of our total operating expenses:

			Three Months Ended June 30,																		Nine Months Ended June 30,
			2023						2022						% Change**(1)**						2023						2022						% Change**(1)**
			(in millions, except percentages)
Personnel			$	1,481					$	1,283					15		%				$	4,333					$	3,634					19		%
Marketing			297						313						(5		%)				938						907						3		%
Network and processing			182						178						2		%				539						558						(3		%)
Professional fees			133						117						13		%				372						342						9		%
Depreciation and amortization			235						230						3		%				696						635						10		%
General and administrative			314						289						9		%				918						856						7		%
Litigation provision			457						717						(36		%)				798						865						(8		%)
Total operating expenses			$	3,099					$	3,127					(1		%)				$	8,594					$	7,797					10		%

(1)Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.

• Personnel expenses increased during the three and nine months ended June 30, 2023 primarily due to higher number of employees and compensation, reflecting our strategy to invest in future growth, including acquisitions.

• Marketing expenses increased during the nine months ended June 30, 2023 primarily due to increased spending in various campaigns, including the FIFA World Cup 2022TM and client marketing. The increase was partially offset by the absence of spending for the Olympic and Paralympic Winter Games Beijing 2022 in the current period.

*•*Depreciation and amortization expenses increased during the nine months ended June 30, 2023 primarily due to additional depreciation and amortization from our on-going investments and acquisitions.

*•*General and administrative expenses increased during the three and nine months ended June 30, 2023 primarily due to higher usage of travel related card benefits, an increase in travel expenses and unfavorable foreign currency fluctuations. The increase during the nine months ended June 30, 2023 was partially offset by the absence of expenses as a result of the suspension of our operations in Russia.

*•*Litigation provision decreased during the three and nine months ended June 30, 2023 primarily due to lower accruals related to the U.S. covered litigation. See Note 13—Legal Matters to our unaudited consolidated financial statements.

Non-operating Income (Expense)

The following table presents the components of our non-operating income (expense):

			Three Months Ended June 30,																		Nine Months Ended June 30,
			2023						2022						% Change**(1)**						2023						2022						% Change**(1)**
			(in millions, except percentages)
Interest expense			$	(182)					$	(111)					64		%				$	(461)					$	(379)					22		%
Investment income (expense) and other			304						(208)						(246		%)				412						(79)						(625		%)
Total non-operating income (expense)			$	122					$	(319)					(138		%)				$	(49)					$	(458)					(89		%)

(1)Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.

*•*Interest expense increased during the three months ended June 30, 2023 primarily driven by losses from derivative instruments and higher interest related to income tax liabilities. Interest expense increased during the nine months ended June 30, 2023 primarily driven by losses from derivative instruments, partially offset by lower interest related to indirect taxes.

*•*Investment income (expense) and other increased during the three months ended June 30, 2023, primarily due to gains on our investments and higher interest income on our cash and investments. Investment income (expense) and other increased during the nine months ended June 30, 2023, primarily due to higher interest income on our cash and investments and lower losses on our investments.

Effective Income Tax Rate

The following table presents our effective income tax rates:

						Three Months Ended June 30,												Nine Months Ended June 30,
						2023						2022						2023						2022
Effective income tax rate						19		%				11		%				18		%				17		%

The difference in the effective tax rates is primarily due to the following:

• During the nine months ended June 30, 2023, a $142 million tax benefit related to prior years due to the reassessment of an uncertain tax position as a result of new information obtained during an ongoing tax examination; and

• During the three months ended June 30, 2022, a $176 million tax benefit related to prior years due to a decrease in the state apportionment ratio as a result of a tax position taken related to a ruling.

Liquidity and Capital Resources

Cash Flow Data

The following table summarizes our cash flow activity for the periods presented:

			Nine Months Ended June 30,
			2023						2022
			(in millions)
Total cash provided by (used in):
Operating activities			$	13,828					$	12,973
Investing activities			(818)						(4,395)
Financing activities			(13,192)						(8,656)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents			844						(725)
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents			$	662					$	(803)

Operating activities. Cash provided by operating activities for the nine months ended June 30, 2023 was higher than the prior-year comparable period primarily due to growth in our underlying business, partially offset by higher incentive and litigation payments.

Investing activities. Cash used in investing activities for the nine months ended June 30, 2023 was lower than the prior-year comparable period primarily due to the absence of cash paid for acquisitions, lower purchases of investment securities and cash received from the settlement of net investment hedge derivative instruments in the current year.

Financing activities. Cash used in financing activities for the nine months ended June 30, 2023 was higher than the prior-year comparable period primarily due to the absence of proceeds from the issuance of senior notes, the principal debt payment upon maturity of our December 2022 senior notes and higher dividends paid, partially offset by lower share repurchases. See Note 7—Debt and Note 9—Stockholders’ Equity to our unaudited consolidated financial statements*.*

Sources of Liquidity

Our primary sources of liquidity are cash on hand, cash flow from our operations, our investment portfolio and access to various equity and borrowing arrangements. Funds from operations are maintained in cash and cash equivalents and short-term or long-term investment securities based upon our funding requirements, access to liquidity from these holdings and the returns that these holdings provide. Based on our current cash flow budgets and forecasts of our short-term and long-term liquidity needs, we believe that our current and projected sources of liquidity will be sufficient to meet our projected liquidity needs for more than the next 12 months. We will continue to assess our liquidity position and potential sources of supplemental liquidity in view of our operating performance, current economic and capital market conditions and other relevant circumstances.

Credit facility extension. In May 2023, we entered into an amended and restated credit agreement for a 5 year, unsecured $7.0 billion revolving credit facility, which will expire in May 2028. See Note 7—Debt to our unaudited consolidated financial statements.

Uses of Liquidity

There has been no significant change to our primary uses of liquidity since September 30, 2022, except as discussed below.

Common stock repurchases. During the nine months ended June 30, 2023, we repurchased shares of our class A common stock in the open market for $8.4 billion. As of June 30, 2023, our repurchase program had remaining authorized funds of $8.8 billion. See Note 9—Stockholders’ Equity to our unaudited consolidated financial statements.

Dividends. During the nine months ended June 30, 2023, we declared and paid $2.8 billion in dividends to holders of our common and preferred stock. On July 25, 2023, our board of directors declared a quarterly cash dividend of $0.45 per share of class A common stock (determined in the case of class B and C common stock and series A, B and C convertible participating preferred stock on an as-converted basis). See Note 9—Stockholders’ Equity to our unaudited consolidated financial statements. We expect to continue paying quarterly dividends in cash, subject to approval by the board of directors. All preferred and class B and C common stock will share ratably on an as-converted basis in such future dividends.

Senior notes. During the nine months ended June 30, 2023, we repaid $2.25 billion of principal upon maturity of our December 2022 senior notes. See Note 7—Debt to our unaudited consolidated financial statements.

Pending acquisition. In June 2023, we entered into a definitive agreement to acquire Pismo for $1.0 billion in cash. This acquisition is subject to customary closing conditions, including applicable regulatory reviews and approvals.

Litigation. During the nine months ended June 30, 2023, we deposited $850 million into the U.S. litigation escrow account to address claims associated with the interchange multidistrict litigation. The balance of this account as of June 30, 2023 was $1.6 billion and is reflected as restricted cash in our consolidated balance sheets. See Note 5—U.S. and Europe Retrospective Responsibility Plans and Note 13—Legal Matters to our unaudited consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

The Financial Accounting Standards Board has issued certain accounting updates, which we have either determined to be not applicable or not expected to have a material impact on our consolidated financial statements.