Item 1. Financial Statements (Unaudited)

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Item 1. Financial Statements (Unaudited)

VISA INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

December 31, 2023September 30, 2023
(in millions, except per share data)
Assets
Cash and cash equivalents$13,591$16,286
Restricted cash equivalents—U.S. litigation escrow1,6161,764
Investment securities5,0053,842
Settlement receivable2,5252,183
Accounts receivable2,5062,291
Customer collateral3,1643,005
Current portion of client incentives1,5721,577
Prepaid expenses and other current assets2,7532,584
Total current assets32,73233,532
Investment securities2,8091,921
Client incentives3,9413,789
Property, equipment and technology, net3,4723,425
Goodwill18,12017,997
Intangible assets, net26,73926,104
Other assets3,5963,731
Total assets$91,409$90,499
Liabilities
Accounts payable$348$375
Settlement payable3,7243,269
Customer collateral3,1643,005
Accrued compensation and benefits8161,506
Client incentives8,0348,177
Accrued liabilities5,0775,015
Accrued litigation1,4711,751
Total current liabilities22,63423,098
Long-term debt20,70320,463
Deferred tax liabilities5,2755,114
Other liabilities3,0643,091
Total liabilities51,67651,766
Commitments and contingencies (Note 13)
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 as of December 31, 2023 and September 30, 20231,6151,698
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); 1,836 (Class A 1,582, Class B 245, Class C 9) and 1,849 (Class A 1,594, Class B 245, Class C 10) shares issued and outstanding as of December 31, 2023 and September 30, 2023, respectively20,49020,452
Right to recover for covered losses(139)(140)
Accumulated income18,42218,040
Accumulated other comprehensive income (loss):
Investment securities(18)(64)
Defined benefit pension and other postretirement plans(153)(155)
Derivative instruments(208)(177)
Foreign currency translation adjustments(276)(921)
Total accumulated other comprehensive income (loss)(655)(1,317)
Total equity39,73338,733
Total liabilities and equity$91,409$90,499

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

VISA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED**)**

Three Months Ended December 31,
20232022
(in millions, except per share data)
Net revenues$8,634$7,936
Operating Expenses
Personnel1,4791,337
Marketing293332
Network and processing181178
Professional fees131109
Depreciation and amortization247227
General and administrative340322
Litigation provision9341
Total operating expenses2,6802,846
Operating income5,9545,090
Non-operating Income (Expense)
Interest expense(187)(137)
Investment income (expense) and other27524
Total non-operating income (expense)88(113)
Income before income taxes6,0424,977
Income tax provision1,152798
Net income$4,890$4,179
Basic Earnings Per Share
Class A common stock$2.39$1.99
Class B common stock$3.80$3.19
Class C common stock$9.58$7.96
Basic Weighted-average Shares Outstanding
Class A common stock1,5841,629
Class B common stock245245
Class C common stock910
Diluted Earnings Per Share
Class A common stock$2.39$1.99
Class B common stock$3.80$3.19
Class C common stock$9.57$7.95
Diluted Weighted-average Shares Outstanding
Class A common stock2,0452,102
Class B common stock245245
Class C common stock910

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 December 31,
20232022
(in millions)
Net income$4,890$4,179
Other comprehensive income (loss):
Investment securities:
Net unrealized gain (loss)5815
Income tax effect(12)(3)
Defined benefit pension and other postretirement plans:
Net unrealized actuarial gain (loss) and prior service credit (cost)—2
Income tax effect—(1)
Reclassification adjustments31
Income tax effect(1)—
Derivative instruments:
Net unrealized gain (loss)(77)(116)
Income tax effect1614
Reclassification adjustments39(7)
Income tax effect(9)(4)
Foreign currency translation adjustments
Translation adjustments5881,209
Income tax effect57—
Other comprehensive income (loss)6621,110
Comprehensive income$5,552$5,289

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 December 31, 2023
Preferred StockCommon Stock and Additional Paid-in CapitalRight to Recover for Covered LossesAccumulated IncomeAccumulated Other Comprehensive Income (Loss)Total Equity
SharesAmountSharesAmount
(in millions, except per share data)
Balance as of September 30, 20235$1,698(1)1,849$20,452$(140)$18,040$(1,317)$38,733
Net income4,8904,890
Other comprehensive income (loss)662662
VE territory covered losses incurred(24)(24)
Recovery through conversion rate adjustment(25)25—
Conversion to class A common stock upon sales into public market—(2)(58)158—
Share-based compensation209209
Stock issued under equity plans2104104
Restricted stock and performance-based shares settled in cash for taxes(1)(172)(172)
Cash dividends declared and paid, at a quarterly amount of $0.52 per class A common stock(1,060)(1,060)
Repurchase of class A common stock(15)(161)(3,448)(3,609)
Balance as of December 31, 20235$1,615(1)1,836$20,490$(139)$18,422$(655)$39,733

(1)As of December 31, 2023 and September 30, 2023, the book value of series A preferred stock was $398 million and $456 million, respectively. Refer to Note 5—U.S. and Europe Retrospective Responsibility Plans for the book value of series B and series C preferred stock.

(2)Increase or decrease 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 December 31, 2022
Preferred StockCommon Stock and Additional Paid-in CapitalRight to Recover for Covered LossesAccumulated IncomeAccumulated Other Comprehensive Income (Loss)Total Equity
SharesAmountSharesAmount
(in millions, except per share data)
Balance as of September 30, 20225$2,324(1)1,890$19,545$(35)$16,116$(2,369)$35,581
Net income4,1794,179
Other comprehensive income (loss)1,1101,110
VE territory covered losses incurred(8)(8)
Recovery through conversion rate adjustment(14)151
Conversion to class A common stock upon sales into public market—(2)(329)5329—
Share-based compensation177177
Stock issued under equity plans25656
Restricted stock and performance-based shares settled in cash for taxes—(2)(112)(112)
Cash dividends declared and paid, at a quarterly amount of $0.45 per class A common stock(945)(945)
Repurchase of class A common stock(16)(168)(2,947)(3,115)
Balance as of December 31, 20225$1,981(1)1,881$19,827$(28)$16,403$(1,259)$36,924

(1)As of December 31, 2022 and September 30, 2022, the book value of series A preferred stock was $723 million and $1.0 billion, respectively. Refer to Note 5—U.S. and Europe Retrospective Responsibility Plans for the book value of series B and series C preferred stock.

(2)Increase or decrease 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)

Three Months Ended December 31,
20232022
(in millions)
Operating Activities
Net income$4,890$4,179
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Client incentives3,3482,786
Share-based compensation209177
Depreciation and amortization247227
Deferred income taxes59(132)
VE territory covered losses incurred(24)(8)
(Gains) losses on equity investments, net(4)106
Other11(26)
Change in operating assets and liabilities:
Settlement receivable(257)(54)
Accounts receivable(195)(60)
Client incentives(3,601)(2,743)
Other assets(204)160
Accounts payable(18)(64)
Settlement payable31344
Accrued and other liabilities(877)(666)
Accrued litigation(283)245
Net cash provided by (used in) operating activities3,6144,171
Investing Activities
Purchases of property, equipment and technology(267)(249)
Investment securities:
Purchases(2,743)(1,995)
Proceeds from maturities and sales1,1371,310
Purchases of other investments(11)(20)
Settlement of derivative instruments—402
Other investing activities(5)42
Net cash provided by (used in) investing activities(1,889)(510)
Financing Activities
Repurchase of class A common stock(3,580)(3,115)
Repayments of debt—(2,250)
Dividends paid(1,060)(945)
Cash proceeds from issuance of class A common stock under equity plans10456
Restricted stock and performance-based shares settled in cash for taxes(172)(112)
Other financing activities32919
Net cash provided by (used in) financing activities(4,379)(6,347)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents300692
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents(2,354)(1,994)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period21,99020,377
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period$19,636$18,383
Supplemental Disclosure
Cash paid for income taxes, net$1,503$721
Interest payments on debt$213$244
Accruals related to purchases of property, equipment and technology$26$27

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., together with its subsidiaries (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 operates one of the world’s largest electronic payments networks — VisaNet — which provides transaction processing services (primarily authorization, clearing and settlement). The Company offers products, solutions and services that facilitate secure, reliable and efficient money movement for 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. Intercompany balances and transactions have been eliminated in consolidation.

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 Visa’s Annual Report on Form 10-K for the year ended September 30, 2023 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.

Note 2—Acquisitions

On January 16, 2024, Visa acquired Pismo Holdings, a global cloud-native issuer processing and core banking platform, for $1.0 billion in cash. Due to the limited amount of time since the acquisition date, the initial allocation of the purchase price is not yet complete. The Company expects to provide the initial purchase price allocation within its Form 10-Q for the second quarter of fiscal 2024.

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 December 31,
20232022
(in millions)
Service revenues$3,915$3,511
Data processing revenues4,3563,827
International transaction revenues3,0192,797
Other revenues692587
Client incentives(3,348)(2,786)
Net revenues$8,634$7,936
Three Months Ended December 31,
20232022
(in millions)
U.S.$3,645$3,567
International4,9894,369
Net revenues$8,634$7,936

Remaining performance obligations are comprised of deferred revenues and contract revenues that will be invoiced and recognized as revenues in future periods primarily related to value added services. As of December 31, 2023, the remaining performance obligations were $3.2 billion. The Company expects approximately half to be recognized as revenues in the next two years and the remaining thereafter. However, the amount and timing of revenue recognition is affected by several factors, including contract modifications and terminations, which could impact the estimate of amounts allocated to remaining performance obligations and when such revenues could be recognized.

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

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

December 31, 2023September 30, 2023
(in millions)
Cash and cash equivalents$13,591$16,286
Restricted cash and restricted cash equivalents:
U.S. litigation escrow1,6161,764
Customer collateral3,1643,005
Prepaid expenses and other current assets1,265935
Cash, cash equivalents, restricted cash and restricted cash equivalents$19,636$21,990

VISA INC.

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

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 (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.

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

Three Months Ended December 31,
20232022
(in millions)
Balance as of beginning of period$1,764$1,449
Deposits into the U.S. litigation escrow account—350
Payments to opt-out merchants(1), net of interest earned on escrow funds(148)(94)
Balance as of end of period$1,616$1,705

(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 (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 (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 the contra-equity account 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 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:

Three Months Ended December 31, 2023
Preferred StockRight to Recover for Covered Losses
Series BSeries C
(in millions)
Balance as of beginning of period$441$801$(140)
VE territory covered losses incurred(1)——(24)
Recovery through conversion rate adjustment(22)(3)25
Balance as of end of period$419$798$(139)

VISA INC.

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

Three Months Ended December 31, 2022
Preferred StockRight to Recover for Covered Losses
Series BSeries C
(in millions)
Balance as of beginning of period$460$812$(35)
VE territory covered losses incurred(1)——(8)
Recovery through conversion rate adjustment(2)(7)(7)15
Balance as of end of period$453$805$(28)

(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.

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 within the Company’s consolidated balance sheets:

December 31, 2023September 30, 2023
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$1,875$419$1,676$441
Series C preferred stock2,9797982,635801
Total4,8541,2174,3111,242
Less: right to recover for covered losses(139)(139)(140)(140)
Total recovery for covered losses available$4,715$1,078$4,171$1,102

(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 December 31, 2023, 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) 2.903 and 3.625, the class A common stock conversion rate applicable to the series B and C preferred stock outstanding, respectively; and (c) $260.35, Visa’s class A common stock closing stock price.

(3)As of September 30, 2023, 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) 2.937 and 3.629, the class A common stock conversion rate applicable to the series B and C preferred stock outstanding, respectively; and (c) $230.01, Visa’s class A common stock closing stock price.

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 1Level 2
December 31, 2023September 30, 2023December 31, 2023September 30, 2023
(in millions)
Assets
Cash equivalents and restricted cash equivalents:
Money market funds$10,316$13,504$—$—
U.S. government-sponsored debt securities——28—
U.S. Treasury securities95301——
Investment securities:
Marketable equity securities397339——
U.S. government-sponsored debt securities——1,5801,108
U.S. Treasury securities5,8374,316——
Other current and non-current assets:
Money market funds2823——
Derivative instruments——154293
Total$16,673$18,483$1,762$1,401
Liabilities
Accrued compensation and benefits:
Deferred compensation liability$221$175$—$—
Accrued and other liabilities:
Derivative instruments——287396
Total$221$175$287$396

Level 1 assets and liabilities. Money market funds, U.S. Treasury securities and marketable equity 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

The amortized cost, unrealized gains and losses and fair value of debt securities were as follows:

December 31, 2023
Amortized CostGross UnrealizedFair Value
GainsLosses
(in millions)
U.S. government-sponsored debt securities$1,607$2$(1)$1,608
U.S. Treasury securities5,95619(43)5,932
Total$7,563$21$(44)$7,540

VISA INC.

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

September 30, 2023
Amortized CostGross UnrealizedFair Value
GainsLosses
(in millions)
U.S. government-sponsored debt securities$1,109$1$(2)$1,108
U.S. Treasury securities4,697—(80)4,617
Total$5,806$1$(82)$5,725

Debt securities with unrealized losses for less than 12 months and 12 months or greater were as follows:

December 31, 2023
Less Than 12 Months12 Months or Greater
Fair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
(in millions)
U.S. government-sponsored debt securities$424$(1)$—$—
U.S. Treasury securities646(2)2,056(41)
Total$1,070$(3)$2,056$(41)
September 30, 2023
Less Than 12 Months12 Months or Greater
Fair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
(in millions)
U.S. government-sponsored debt securities$412$(2)$50$—
U.S. Treasury securities1,360(12)2,128(68)
Total$1,772$(14)$2,178$(68)

The unrealized losses were primarily attributable to changes in interest rates.

The stated maturities of debt securities were as follows:

December 31, 2023
(in millions)
Due within one year$4,731
Due after one year through five years2,809
Total$7,540

Equity Securities

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

VISA INC.

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

The following table summarizes the total carrying value of the Company’s non-marketable equity securities that were accounted for using the fair value measurement alternative and held as of December 31, 2023, including the cumulative unrealized gains and losses:

December 31, 2023
(in millions)
Initial cost basis$710
Adjustments:
Upward adjustments909
Downward adjustments (including impairment)(430)
Carrying amount$1,189

Unrealized gains and losses included in the carrying value of the Company’s non-marketable equity securities accounted for using the fair value measurement alternative and still held as of December 31, 2023 and 2022, respectively, were as follows:

Three Months Ended December 31,
20232022
(in millions)
Upward adjustments$9$17
Downward adjustments (including impairment)$—$—

For the three months ended December 31, 2023 and 2022, the Company recognized net unrealized gains of $36 million and net unrealized losses of $102 million, respectively, on marketable and non-marketable equity securities still held as of quarter end.

Other Fair Value Disclosures

Debt. Debt instruments are measured at amortized cost on the Company’s 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 December 31, 2023, the carrying value and estimated fair value of debt was $20.7 billion and $19.0 billion, respectively. As of September 30, 2023, the carrying value and estimated fair value of debt was $20.5 billion and $17.7 billion, respectively.

Other financial instruments not measured at fair value. As of December 31, 2023, the carrying values of settlement receivable and payable and customer collateral are an 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.

Non-financial assets. Certain non-financial assets such as goodwill, intangible assets and property, equipment and technology are subject to non-recurring fair value measurements 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, 2023, and concluded there was no impairment as of that date. No recent events or changes in circumstances indicated that impairment existed as of December 31, 2023.

VISA INC.

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

Note 7—Debt

The Company had outstanding debt as follows:

December 31, 2023September 30, 2023Effective Interest Rate**(1)**
(in millions, except percentages)
U.S. dollar notes
3.15% Senior Notes due December 2025$4,000$4,0003.26%
1.90% Senior Notes due April 20271,5001,5002.02%
0.75% Senior Notes due August 20275005000.84%
2.75% Senior Notes due September 20277507502.91%
2.05% Senior Notes due April 20301,5001,5002.13%
1.10% Senior Notes due February 20311,0001,0001.20%
4.15% Senior Notes due December 20351,5001,5004.23%
2.70% Senior Notes due April 20401,0001,0002.80%
4.30% Senior Notes due December 20453,5003,5004.37%
3.65% Senior Notes due September 20477507503.73%
2.00% Senior Notes due August 20501,7501,7502.09%
Euro notes
1.50% Senior Notes due June 20261,4971,4341.71%
2.00% Senior Notes due June 20291,1091,0622.13%
2.375% Senior Notes due June 20347216902.53%
Total debt21,07720,936
Unamortized discounts and debt issuance costs(156)(159)
Hedge accounting fair value adjustments(2)(218)(314)
Total carrying value of debt$20,703$20,463
Reported as:
Current maturities of debt$—$—
Long-term debt20,70320,463
Total carrying value of debt$20,703$20,463

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

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

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 three months ended December 31, 2023, the Company’s maximum daily settlement exposure was $133.2 billion and the average daily settlement exposure was $83.0 billion.

VISA INC.

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

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:

December 31, 2023September 30, 2023
(in millions)
Restricted cash$3,164$3,005
Pledged securities504411
Letters of credit1,7791,738
Guarantees1,0541,047
Total$6,501$6,201

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:

December 31, 2023September 30, 2023
Shares OutstandingConversion Rate Into Class A Common StockAs-converted Class A Common Stock**(1)**Shares OutstandingConversion Rate Into Class A Common StockAs-converted Class A Common Stock**(1)**
(in millions, except conversion rate)
Series A preferred stock—(2)100.00006—(2)100.00007
Series B preferred stock22.9030722.93707
Series C preferred stock33.62501133.629011
Class A common stock1,582—1,5821,594—1,594
Class B common stock2451.5875(3)3902451.5875(3)390
Class C common stock94.000038104.000038
Total2,0342,047

(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)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.

Reduction in as-converted shares. The following table presents the reduction in the number of as-converted class B common stock after deposits into the U.S. litigation escrow account under the U.S. retrospective responsibility plan:

Three Months Ended December 31,
20232022
(in millions, except per share data)
Reduction in equivalent number of class A common stock—2
Effective price per share(1)$—$209.14
Deposits into the U.S. litigation escrow account$—$350

(1)Effective price per share for each adjustment 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.

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 under the Europe retrospective responsibility plan:

Three Months Ended December 31, 2023Three Months Ended December 31, 2022
Series BSeries CSeries BSeries 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)$254.32$254.32$211.34$211.34
Recovery through conversion rate adjustment$22$3$7$7

(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 each adjustment 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.

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

Three Months Ended December 31,
20232022
(in millions, except per share data)
Shares repurchased in the open market(1)1516
Average repurchase cost per share(2)$238.47$197.69
Total cost(2)$3,609$3,115

(1)Shares repurchased in the open market reflect repurchases that settled during the three months ended December 31, 2023 and 2022. 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 cost per share and total cost are calculated based on unrounded numbers and include applicable taxes.

In October 2023 and 2022, the Company’s board of directors authorized share repurchase programs of $25.0 billion providing multi-year flexibility, and $12.0 billion, respectively. These authorizations have no expiration date. As of December 31, 2023, the Company’s share repurchase programs had remaining authorized funds of $26.4 billion. All share repurchase programs authorized prior to October 2022 have been completed.

Class B common stock. On January 23, 2024, Visa’s common stockholders approved amendments to the Company’s certificate of incorporation authorizing Visa to implement an exchange offer program that would have the effect of releasing transfer restrictions on portions of the Company’s class B common stock. The certificate of incorporation amendments automatically redenominate all shares of class B common stock as class B-1 common stock with no changes to the par value, conversion features, rights and privileges of the class B common stock. The amendments also authorized new classes of class B common stock that will only be issuable in connection with an exchange offer where a preceding class of B common stock was tendered in exchange and retired. The new authorization will have no impact to outstanding diluted earnings per class A common stock.

Dividends. During the three months ended December 31, 2023 and 2022, the Company declared and paid dividends of $1.1 billion and $945 million, respectively. On January 23, 2024, the Company’s board declared a quarterly cash dividend of $0.52 per share of class A common stock (determined in the case of class B-1 and C common stock and series A, B and C preferred stock on an as-converted basis), payable on March 1, 2024, to all holders of record as of February 9, 2024.

VISA INC.

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

Note 10—Earnings Per Share

The following table presents earnings per share for the three months ended December 31, 2023:

Basic Earnings Per ShareDiluted 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$3,7921,584$2.39$4,8902,045(3)$2.39
Class B common stock933245$3.80$932245$3.80
Class C common stock919$9.58$919$9.57
Participating securities74Not presentedNot presented$74Not presentedNot presented
Net income$4,890

The following table presents earnings per share for the three months ended December 31, 2022:

Basic Earnings Per ShareDiluted 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$3,2431,629$1.99$4,1792,102(3)$1.99
Class B common stock784245$3.19$784245$3.19
Class C common stock7810$7.96$7810$7.95
Participating securities74Not presentedNot presented$74Not presentedNot presented
Net income$4,179

(1)The weighted-average number of shares of as-converted class B common stock used in the income allocation was 390 million and 394 million for the three months ended December 31, 2023 and 2022, respectively. The weighted-average number of shares of as-converted class C common stock used in the income allocation was 38 million and 39 million for the three months ended December 31, 2023 and 2022, respectively. The weighted-average number of shares of preferred stock included within participating securities was 6 million and 13 million of as-converted series A preferred stock for the three months ended December 31, 2023 and 2022, respectively, 7 million of as-converted series B preferred stock for the three months ended December 31, 2023 and 2022 and 11 million of as-converted series C preferred stock for the three months ended December 31, 2023 and 2022.

(2)Figures in the table may not recalculate exactly due to rounding. Basic and diluted earnings per share are 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 months ended December 31, 2023 and 2022.

Note 11—Share-based Compensation

The following table presents the equity awards granted to employees and non-employee directors under the amended and restated 2007 Equity Incentive Compensation Plan (EIP) during the three months ended December 31, 2023:

GrantedWeighted-Average Grant Date Fair ValueWeighted-Average Exercise Price
Non-qualified stock options722,695$62.55$249.56
Restricted stock units2,735,697$249.56
Performance-based shares(1)528,008$281.85

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

VISA INC.

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

For the three months ended December 31, 2023 and 2022, the Company recorded share-based compensation cost related to the EIP of $200 million and $170 million, respectively.

Note 12—Income Taxes

For the three months ended December 31, 2023 and 2022, the effective income tax rates were 19% and 16%, respectively. The difference in the effective tax rates is primarily due to a $142 million tax benefit recognized during the three months ended December 31, 2022 due to the reassessment of an uncertain tax position as a result of new information obtained during an ongoing tax examination.

During the three months ended December 31, 2023, the Company’s gross unrecognized tax benefits increased by $113 million. The Company’s net unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate, increased by $29 million. The change in unrecognized tax benefits is related to various tax positions across several jurisdictions.

In January 2024, a resolution was reached regarding India tax assessments for years falling within the period from 2010 to 2019. As a result, the Company filed to withdraw appeals to the appellate authorities for these years.

Effective through September 30, 2028, the Company’s operating hub in the Asia Pacific region is subject to a tax incentive in Singapore which is conditional upon meeting certain requirements.

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 and refund claims are uncertain. However, it is reasonably possible that the Company’s net unrecognized tax benefits could decrease by approximately $400 million in the next 12 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. For those proceedings where a loss is determined to be only reasonably possible or probable but not estimable, the Company has disclosed the nature of the claim. Additionally, unless otherwise disclosed below with respect to these proceedings, the Company cannot provide an estimate of the possible loss or range of loss. 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.

The following table summarizes the activity related to accrued litigation:

Three Months Ended December 31,
20232022
(in millions)
Balance as of beginning of period$1,751$1,456
Provision for uncovered legal matters10—
Provision for covered legal matters22347
Payments for legal matters(312)(101)
Balance as of end of period$1,471$1,702

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

VISA INC.

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

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:

Three Months Ended December 31,
20232022
(in millions)
Balance as of beginning of period$1,621$1,441
Provision for interchange multidistrict litigation—341
Payments for U.S. covered litigation(160)(101)
Balance as of end of period$1,461$1,681

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.

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

Three Months Ended December 31,
20232022
(in millions)
Balance as of beginning of period$110$11
Provision for VE territory covered litigation226
Payments for VE territory covered litigation(126)—
Balance as of end of period$6$17

U.S. Covered Litigation

Interchange Multidistrict Litigation (MDL) - Class Actions

On December 4, 2023, plaintiffs in the two actions led, respectively, by Hayley Lanning and Camp Grounds Coffee, served a motion for partial summary judgment. On January 8, 2024, defendants’ motions for summary judgment under Ohio v. American Express were granted in part and denied in part.

Interchange Multidistrict Litigation (MDL) - Individual Merchant Actions

Visa has reached settlements with a number of merchants representing approximately 73% of the Visa-branded payment card sales volume of merchants who opted out of the Amended Settlement Agreement with the Damages Class plaintiffs.

On November 1, 2023, defendants served a motion to enforce the Amended Settlement Agreement, or in the alternative for summary judgment, regarding claims in the actions brought by certain plaintiffs in their capacity as payment facilitators. On December 4, 2023, plaintiffs in certain of the individual merchant actions served a motion

VISA INC.

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

for partial summary judgment or a joinder in partial summary judgment motions. On January 8, 2024, defendants’ motions for summary judgment under Ohio v. American Express were granted in part and denied in part.

VE Territory Covered Litigation

Europe Merchant Litigation

Since July 2013, proceedings have been commenced by more than 1,150 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) against Visa Europe, Visa Inc. and other Visa subsidiaries in the UK and other countries 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 475 Merchants, and there are approximately 600 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.

Other Litigation

MiCamp Solutions

On December 8, 2023, a complaint was filed in the U.S. District Court for the Northern District of California by MiCamp Solutions, LLC against Visa on behalf of a purported class of Independent Sales Organizations (ISOs) and their merchant customers and a purported subclass of ISOs. The complaint alleges violations of federal and state antitrust laws, state data privacy laws, and the constitution, based on, among other things, Visa’s interchange fees and its assessment of fees for non-compliance with its surcharge rules. The complaint seeks to recover damages and to enjoin the enforcement of Visa’s default interchange and surcharge rules, among other things.

Mirage Wine + Spirit’s Inc.

On December 14, 2023, a putative class action was filed in the U.S. District Court for the Southern District of Illinois by Mirage Wine + Spirit’s Inc. against Apple Inc., Visa Inc. and Mastercard Incorporated on behalf of certain merchants in the United States that accepted Apple Pay as a method of payment at the physical point-of-sale from December 14, 2019. Plaintiff alleges a conspiracy under which Apple agreed not to enter a purported market for point-of-sale payment card networks services and seeks damages, injunctive relief and attorneys’ fees based on alleged violations of section 1 of the Sherman Act. On January 5, 2024, Visa requested transfer of the action to the U.S. District Court for the Eastern District of New York for coordinated or consolidated pretrial proceedings with the Interchange Multidistrict Litigation.

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