Visa 10-Q 2024-03-31

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 March 31, 2024

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
San Francisco,						California									94128-8999
(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 April 17, 2024, there were 1,574,151,974 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-1 common stock, par value $0.0001 per share, and 9,273,174 shares outstanding of the registrant’s class C common stock, par value $0.0001 per share.

VISA

TABLE OF CONTENTS

						Page
PART I.			Financial Information			3
Item 1.			Financial Statements (Unaudited)			3
			Consolidated Balance Sheets—March 31, 2024 and September 30, 2023			3
			Consolidated Statements of Operations—Three and Six Months Ended March 31, 2024 and 2023			4
			Consolidated Statements of Comprehensive Income—Three and Six Months Ended March 31, 2024 and 2023			5
			Consolidated Statements of Changes in Equity—Three and Six Months Ended March 31, 2024 and 2023			6
			Consolidated Statements of Cash Flows—Six Months Ended March 31, 2024 and 2023			10
			Notes to Consolidated Financial Statements (Unaudited)			11
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			27
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			37
Item 4.			Controls and Procedures			37
PART II.			Other Information			38
Item 1.			Legal Proceedings			38
Item 1A.			Risk Factors			38
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			39
Item 3.			Defaults Upon Senior Securities			39
Item 4.			Mine Safety Disclosures			39
Item 5.			Other Information			39
Item 6.			Exhibits			40
			Signatures			41

PART I. FINANCIAL INFORMATION

VISA

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

			March 31, 2024						September 30, 2023
			(in millions, except per share data)
Assets
Cash and cash equivalents			$	12,993					$	16,286
Restricted cash equivalents—U.S. litigation escrow			1,584						1,764
Investment securities			4,710						3,842
Settlement receivable			3,558						2,183
Accounts receivable			2,272						2,291
Customer collateral			3,367						3,005
Current portion of client incentives			1,740						1,577
Prepaid expenses and other current assets			2,551						2,584
Total current assets			32,775						33,532
Investment securities			3,092						1,921
Client incentives			3,998						3,789
Property, equipment and technology, net			3,630						3,425
Goodwill			18,837						17,997
Intangible assets, net			26,375						26,104
Other assets			3,692						3,731
Total assets			$	92,399					$	90,499
Liabilities
Accounts payable			$	338					$	375
Settlement payable			4,485						3,269
Customer collateral			3,367						3,005
Accrued compensation and benefits			1,065						1,506
Client incentives			7,949						8,177
Accrued liabilities			4,386						5,015
Accrued litigation			1,853						1,751
Total current liabilities			23,443						23,098
Long-term debt			20,603						20,463
Deferred tax liabilities			5,145						5,114
Other liabilities			2,723						3,091
Total liabilities			51,914						51,766
Commitments and contingencies (Note 13)
Equity
Preferred stock, $0.0001 par value, 5 shares issued and outstanding as of March 31, 2024 and September 30, 2023			1,602						1,698
Common stock, $0.0001 par value:
Class A common stock, 1,574 and 1,594 shares issued and outstanding as of March 31, 2024 and September 30, 2023, respectively			—						—
Class B-1 common stock, 245 shares issued and outstanding as of March 31, 2024 and September 30, 2023			—						—
Class C common stock, 9 and 10 shares issued and outstanding as of March 31, 2024 and September 30, 2023, respectively			—						—
Right to recover for covered losses			(175)						(140)
Additional paid-in capital			20,709						20,452
Accumulated income			19,347						18,040
Accumulated other comprehensive income (loss):
Investment securities			(25)						(64)
Defined benefit pension and other postretirement plans			(145)						(155)
Derivative instruments			(162)						(177)
Foreign currency translation adjustments			(666)						(921)
Total accumulated other comprehensive income (loss)			(998)						(1,317)
Total equity			40,485						38,733
Total liabilities and equity			$	92,399					$	90,499

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

VISA

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED**)**

			Three Months Ended March 31,												Six Months Ended March 31,
			2024						2023						2024						2023
			(in millions, except per share data)
Net revenue			$	8,775					$	7,985					$	17,409					$	15,921
Operating Expenses
Personnel			1,603						1,515						3,082						2,852
Marketing			338						309						631						641
Network and processing			189						179						370						357
Professional fees			160						130						291						239
Depreciation and amortization			249						234						496						461
General and administrative			452						282						792						604
Litigation provision			430						—						439						341
Total operating expenses			3,421						2,649						6,101						5,495
Operating income			5,354						5,336						11,308						10,426
Non-operating Income (Expense)
Interest expense			(82)						(142)						(269)						(279)
Investment income (expense) and other			241						84						516						108
Total non-operating income (expense)			159						(58)						247						(171)
Income before income taxes			5,513						5,278						11,555						10,255
Income tax provision			850						1,021

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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; the completion of the class B-1 exchange offer; 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 unaudited 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, 2023, 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 proprietary advanced transaction processing network. We offer products, solutions and services 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 March 31,																		Six Months Ended March 31,
			2024						2023						% Change**(1)**						2024						2023						% Change**(1)**
			(in millions, except percentages and per share data)
Net revenue			$	8,775					$	7,985					10		%				$	17,409					$	15,921					9		%
Operating expenses			$	3,421					$	2,649					29		%				$	6,101					$	5,495					11		%
Net income			$	4,663					$	4,257					10		%				$	9,553					$	8,436					13		%
Diluted earnings per share			$	2.29					$	2.03					12		%				$	4.68					$	4.02					16		%
Non-GAAP operating expenses(2)			$	2,871					$	2,581					11		%				$	5,490					$	5,020					9		%
Non-GAAP net income(2)			$	5,117					$	4,384					17		%				$	10,055					$	8,965					12		%
Non-GAAP diluted earnings per share(2)			$	2.51					$	2.09					20		%				$	4.92					$	4.27					15		%

(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.

Highlights for the first half of fiscal 2024. For the three and six months ended March 31, 2024, net revenue increased 10% and 9% over the prior-year comparable periods, respectively, 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 six months ended March 31, 2024, exchange rate movements did not have a material impact on net revenue growth. See Results of Operations—Net Revenue below for further discussion.

For the three months ended March 31, 2024, GAAP operating expenses increased 29% over the prior-year comparable period, primarily driven by higher litigation provision and general and administrative expenses. For the six months ended March 31, 2024, GAAP operating expenses increased 11% over the prior-year comparable period, primarily driven by higher personnel and general and administrative expenses. See Results of Operations—Operating Expenses below for further discussion. During the three and six months ended March 31, 2024, exchange rate movements did not have a material impact on our operating expenses growth.

For the three and six months ended March 31, 2024, non-GAAP operating expenses increased 11% and 9% over the prior-year comparable periods, respectively, primarily driven by higher general and administrative and personnel expenses.

Acquisition. On January 16, 2024, we acquired Pismo Holdings (Pismo), a global cloud-native issuer processing and core banking platform, for a purchase consideration of $929 million. See Note 2—Acquisitions to our unaudited consolidated financial statements.

Interchange multidistrict litigation. During the six months ended March 31, 2024, we recorded an additional accrual pursuant to the agreement to resolve the Injunctive Relief Class claims in the interchange multidistrict litigation. See Note 13—Legal Matters to our unaudited consolidated financial statements.

Common stock repurchases. During the six months ended March 31, 2024, we repurchased 25 million shares of our class A common stock in the open market for $6.4 billion. As of March 31, 2024, our share repurchase program had remaining authorized funds of $23.6 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 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 technology, customer relationships and trade names 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 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 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 as the expenses are recognized for a limited duration and do not reflect the underlying performance of our business.

• Litigation provision. Litigation provision includes significant accruals related to certain legal matters that are not covered by the U.S. retrospective responsibility plan or the Europe retrospective responsibility plan (uncovered legal matters) and additional accruals associated with the interchange multidistrict litigation which are covered by the U.S. retrospective responsibility plan (U.S. covered litigation). Litigation provision associated with these matters can vary significantly based on the facts and circumstances related to each matter and do not correlate to the underlying performance of our business. During the three and six months ended March 31, 2024, and six months ended March 31, 2023, we have excluded these amounts to facilitate a comparison to our past operating performance.

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-1 common stock ultimately convert into shares of class A common stock. During the three and six months ended March 31, 2024, there was no conversion rate adjustment. During the six months ended March 31, 2023, basic and diluted earnings per class A common stock increased $0.01 and was unchanged, respectively, as a result of the downward adjustments of the class B-1 common stock conversion rate during the period. See Note 5—U.S. and Europe Retrospective Responsibility Plans and Note 13—Legal Matters to our unaudited consolidated financial statements.

*•*Lease consolidation costs. During the three and six months ended March 31, 2024, we recorded a charge within general and administrative expense associated with the consolidation of certain leased office spaces. We have excluded these amounts as they 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 March 31, 2024
									Operating Expenses												Non-operating Income (Expense)												Income Tax Provision**(1)**						Effective Income Tax Rate**(2)**						Net Income						Diluted Earnings Per Share**(2)**
									(in millions, except percentages and per share data)
As reported									$	3,421											$	159											$	850					15.4		%				$	4,663					$	2.29
(Gains) losses on equity investments, net									—												30												7												23						0.01
Amortization of acquired intangible assets									(43)												—												10												33						0.02
Acquisition-related costs									(26)												—												1												25						0.01
Litigation provision									(424)												—												95												329						0.16
Lease consolidation costs									(57)												—												13												44						0.02
Non-GAAP									$	2,871											$	189											$	976					16.0		%				$	5,117					$	2.51

									Six Months Ended March 31, 2024
									Operating Expenses												Non-operating Income (Expense)												Income Tax Provision**(1)**						Effective Income Tax Rate**(2)**						Net Income						Diluted Earnings Per Share**(2)**
									(in millions, except percentages and per share data)
As reported									$	6,101											$	247											$	2,002					17.3		%				$	9,553					$	4.68
(Gains) losses on equity investments, net									—												26												6												20						0.01
Amortization of acquired intangible assets									(83)												—												19												64						0.03
Acquisition-related costs									(47)												—												2												45						0.02
Litigation provision									(424)												—												95												329						0.16
Lease consolidation costs									(57)												—												13												44						0.02
Non-GAAP									$	5,490											$	273											$	2,137					17.5		%				$	10,055					$	4.92

									Three Months Ended March 31, 2023
									Operating Expenses												Non-operating Income (Expense)												Income Tax Provision**(1)**						Effective Income Tax Rate**(2)**						Net Income						Diluted Earnings Per Share**(2)**
									(in millions, except percentages and per share data)
As reported									$	2,649											$	(58)											$	1,021					19.3		%				$	4,257					$	2.03
(Gains) losses on equity investments, net									—												90												19												71						0.03
Amortization of acquired intangible assets									(46)												—												10												36						0.02
Acquisition-related costs									(22)												—												2												20						0.01
Non-GAAP									$	2,581											$	32											$	1,052					19.4		%				$	4,384					$	2.09

									Six Months Ended March 31, 2023
									Operating Expenses												Non-operating Income (Expense)												Income Tax Provision**(1)**						Effective Income Tax Rate**(2)**						Net Income						Diluted Earnings Per Share**(2)**
									(in millions, except percentages and per share data)
As reported									$	5,495											$	(171)											$	1,819					17.7		%				$	8,436					$	4.02
(Gains) losses on equity investments, net									—												196												43												153						0.07
Amortization of acquired intangible assets									(89)												—												19												70						0.03
Acquisition-related costs									(45)												—												4												41						0.02
Litigation provision									(341)												—												76												265						0.13
Non-GAAP									$	5,020											$	25											$	1,961					17.9		%				$	8,965					$	4.27

(1)Determined by applying applicable tax rates.

(2)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 revenue, and the number of processed transactions is the primary driver for our data processing revenue.

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 include payments and cash transactions, and 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
			Three Months Ended December 31,****(1)																		Three Months Ended December 31,****(1)																		Three Months Ended December 31,****(1)
			2023						2022						% Change**(2)**						2023						2022						% Change**(2)**						2023						2022						% Change**(2)**
			(in billions, except percentages)
Nominal payments volume
Consumer credit			$	601					$	569					6		%				$	755					$	697					8		%				$	1,356					$	1,265					7		%
Consumer debit(3)			743						707						5		%				764						664						15		%				1,507						1,372						10		%
Commercial(4)			259						246						5		%				157						137						15		%				416						384						8		%
Total nominal payments volume**(2)**			$	1,603					$	1,522					5		%				$	1,677					$	1,498					12		%				$	3,280					$	3,020					9		%
Cash volume(5)			150						151						(1		%)				484						466						4		%				634						617						3		%
Total nominal volume**(2),(6)**			$	1,752					$	1,673					5		%				$	2,161					$	1,965					10		%				$	3,914					$	3,637					8		%
			U.S.																		International																		Visa
			Six Months Ended December 31,****(1)																		Six Months Ended December 31,****(1)																		Six Months Ended December 31,****(1)
			2023						2022						% Change**(2)**						2023						2022						% Change**(2)**						2023						2022						% Change**(2)**
			(in billions, except percentages)
Nominal payments volume
Consumer credit			$	1,181					$	1,120					5		%				$	1,491					$	1,381					8		%				$	2,672					$	2,501					7		%
Consumer debit(3)			1,473						1,390						6		%				1,511						1,302						16		%				2,985						2,692						11		%
Commercial(4)			518						492						5		%				307						268						15		%				825						759						9		%
Total nominal payments volume**(2)**			$	3,172					$	3,002					6		%				$	3,310					$	2,951					12		%				$	6,482					$	5,952					9		%
Cash volume(5)			304						306						(1		%)				959						917						5		%				1,263						1,223						3		%
Total nominal volume**(2),(6)**			$	3,476					$	3,308					5		%				$	4,269					$	3,868					10		%				$	7,745					$	7,175					8		%

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

			International												Visa												International												Visa
			Three Months Ended December 31, 2023 vs. 2022**(1),(2)**												Three Months Ended December 31, 2023 vs. 2022**(1),(2)**												Six Months Ended December 31, 2023 vs. 2022**(1),(2)**												Six Months Ended December 31, 2023 vs. 2022**(1),(2)**
			Nominal						Constant**(7)**						Nominal						Constant**(7)**						Nominal						Constant**(7)**						Nominal						Constant**(7)**
Payments volume growth
Consumer credit growth			8		%				10		%				7		%				8		%				8		%				10		%				7		%				8		%
Consumer debit growth(3)			15		%				13		%				10		%				9		%				16		%				13		%				11		%				9		%
Commercial growth(4)			15		%				15		%				8		%				8		%				15		%				15		%				9		%				9		%
Total payments volume growth			12		%				12		%				9		%				8		%				12		%				12		%				9		%				9		%
Cash volume growth(5)			4		%				3		%				3		%				2		%				5		%				4		%				3		%				3		%
Total volume growth			10		%				10		%				8		%				7		%				10		%				10		%				8		%				8		%

(1)Service revenue in a given quarter is primarily assessed based on nominal payments volume in the prior quarter. Therefore, service revenue reported for the three and six months ended March 31, 2024 and 2023, respectively, was based on nominal payments volume reported by our financial institution clients for the three and six months ended December 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 March 31,																		Six Months Ended March 31,
2024						2023						% Change**(1)**						2024						2023						% Change**(1)**
(in millions, except percentages)
Visa processed transactions			55,456						50,069						11		%				112,928						102,581						10		%

(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 Revenue

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

			Three Months Ended March 31,																		Six Months Ended March 31,
			2024						2023						% Change**(1)**						2024						2023						% Change**(1)**
			(in millions, except percentages)
U.S.			$	3,643					$	3,540					3		%				$	7,288					$	7,107					3		%
International			5,132						4,445						15		%				10,121						8,814						15		%
Net revenue			$	8,775					$	7,985					10		%				$	17,409					$	15,921					9		%

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

Net revenue increased over the three and six-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 revenue is impacted by the overall strengthening or weakening of the U.S. dollar as payments volume and related revenue denominated in local currencies are converted to U.S. dollars. During the three and six months ended March 31, 2024, exchange rate movements did not have a material impact on net revenue growth.

The following table presents the components of our net revenue:

			Three Months Ended March 31,																		Six Months Ended March 31,
			2024						2023						% Change**(1)**						2024						2023						% Change**(1)**
			(in millions, except percentages)
Service revenue			$	4,033					$	3,771					7		%				$	7,948					$	7,282					9		%
Data processing revenue			4,259						3,819						12		%				8,615						7,646						13		%
International transaction revenue			2,984						2,749						9		%				6,003						5,546						8		%
Other revenue			756						551						37		%				1,448						1,138						27		%
Client incentives			(3,257)						(2,905)						12		%				(6,605)						(5,691)						16		%
Net revenue			$	8,775					$	7,985					10		%				$	17,409					$	15,921					9		%

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

*•*Service revenue increased primarily due to 9% growth in nominal payments volume over the three and six-month prior-year comparable periods.

*•*Data processing revenue increased primarily due to 11% and 10% growth in processed transactions over the three and six-month prior-year comparable periods, respectively, and select pricing modifications.

*•*International transaction revenue increased primarily due to growth in nominal cross-border volumes of 16% and 17% over the three and six-month prior-year comparable periods, respectively, excluding transactions within Europe, partially offset by lower volatility of a broad range of currencies.

• Other revenue increased primarily due to growth in consulting and marketing services and select pricing modifications over the three and six-month prior-year comparable periods.

• Client incentives increased primarily due to growth in payments volume over the three and six-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 March 31,																		Six Months Ended March 31,
			2024						2023						% Change**(1)**						2024						2023						% Change**(1)**
			(in millions, except percentages)
Personnel			$	1,603					$	1,515					6		%				$	3,082					$	2,852					8		%
Marketing			338						309						9		%				631						641						(2		%)
Network and processing			189						179						6		%				370						357						4		%
Professional fees			160						130						22		%				291						239						21		%
Depreciation and amortization			249						234						7		%				496						461						8		%
General and administrative			452						282						61		%				792						604						31		%
Litigation provision			430						—						NM						439						341						29		%
Total operating expenses			$	3,421					$	2,649					29		%				$	6,101					$	5,495					11		%

NM - Not meaningful

(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 six months ended March 31, 2024 primarily due to a higher number of employees and compensation, reflecting our strategy to invest in future growth.

*•*Marketing expenses increased during the three months ended March 31, 2024 primarily due to higher spending in various campaigns. Marketing expenses decreased during the six months ended March 31, 2024 primarily due to spend related to the FIFA World CupTM in the prior year and absent in the current year, partially offset by higher spending in various campaigns.

*•*Professional fees increased during the three and six months ended March 31, 2024 primarily due to higher advisory and consulting fees. The increase during the six months ended March 31, 2024 also included higher legal fees.

*•*General and administrative expenses increased during the three and six months ended March 31, 2024 primarily due to lease consolidation costs, higher indirect taxes and higher usage of travel related card benefits. The increase during the three months ended March 31, 2024 also included unfavorable foreign currency fluctuations.

*•*Litigation provision increased during the three months ended March 31, 2024 due to the accruals related to the uncovered litigation and U.S. covered litigation. Litigation provision increased during the six months ended March 31, 2024 due to the accruals related to the uncovered litigation, partially offset by 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 March 31,																		Six Months Ended March 31,
			2024						2023						% Change**(1)**						2024						2023						% Change**(1)**
			(in millions, except percentages)
Interest expense			$	(82)					$	(142)					(43		%)				$	(269)					$	(279)					(4		%)
Investment income (expense) and other			241						84						185		%				516						108						376		%
Total non-operating income (expense)			$	159					$	(58)					(375		%)				$	247					$	(171)					(245		%)

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

*•*Interest expense decreased during the three months ended March 31, 2024 primarily due to higher interest benefit related to taxes, partially offset by higher losses from derivative instruments. Interest expense decreased during the six months ended March 31, 2024 primarily due to higher interest benefit related to taxes and lower interest expense related to lower outstanding debt, partially offset by losses from derivative instruments.

*•*Investment income (expense) and other increased during the three months ended March 31, 2024, primarily due to higher interest income on our cash and investments and lower losses on our investments. Investment income (expense) and other increased during the six months ended March 31, 2024, primarily due to higher interest income on our cash and investments and gains on our investments.

Effective Income Tax Rate

The following table presents our effective income tax rates:

						Three Months Ended March 31,												Six Months Ended March 31,
						2024						2023						2024						2023
Effective income tax rate						15		%				19		%				17		%				18		%

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

• During the three and six months ended March 31, 2024, a $184 million tax benefit as a result of the conclusion of an audit; and

• During the six months ended March 31, 2023, a $142 million tax benefit due to the reassessment of an uncertain tax position as a result of new information obtained during an ongoing tax examination.

Liquidity and Capital Resources

Cash Flow Data

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

			Six Months Ended March 31,
			2024						2023
			(in millions)
Total cash provided by (used in):
Operating activities			$	8,152					$	8,031
Investing activities			$	(3,065)					$	(835)
Financing activities			$	(8,253)					$	(9,273)

Operating activities. Cash provided by operating activities for the six months ended March 31, 2024 was higher than the prior-year comparable period primarily due to growth in our underlying business, partially offset by higher incentive payments.

Investing activities. Cash used in investing activities for the six months ended March 31, 2024 was higher than the prior-year comparable period primarily due to cash paid for acquisitions, net of cash acquired, higher purchases, net of maturities and sales, of investment securities and cash received from the settlement of net investment hedge derivative instruments in the prior year. See Note 2—Acquisitions to our unaudited consolidated financial statements*.*

Financing activities. Cash used in financing activities for the six months ended March 31, 2024 was lower than the prior-year comparable period primarily due to the principal debt payment upon maturity of our December 2022 senior notes in the prior year, partially offset by higher share repurchases and higher dividends paid. 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.

Uses of Liquidity

There has been no significant change to our primary uses of liquidity since September 30, 2023, except as discussed below.

Common stock repurchases. During the six months ended March 31, 2024, we repurchased shares of our class A common stock in the open market for $6.4 billion. As of March 31, 2024, our share repurchase program had remaining authorized funds of $23.6 billion. See Note 9—Stockholders’ Equity to our unaudited consolidated financial statements.

Dividends. During the six months ended March 31, 2024, we declared and paid $2.1 billion in dividends to holders of our common and preferred stock. On April 23, 2024, our board declared a quarterly cash dividend of $0.52 per share of class A common stock (determined in the case of all other outstanding common and 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.

Acquisition. On January 16 2024, we acquired Pismo for a purchase consideration of $929 million. See Note 2—Acquisitions to our unaudited consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This standard also enhances interim disclosure requirements and provides new segment disclosure requirements for entities with a single reportable segment. This ASU is effective for our annual periods beginning October 1, 2024, and interim periods beginning October 1, 2025, and requires retrospective application to all prior periods presented. We are currently evaluating the impact of the ASU on our disclosures.

In December 2023, the FASB issued ASU 2023-09, which provides improvements to income tax disclosures. This standard requires disaggregated information related to effective tax rate reconciliation as well as information on income taxes paid. This ASU is effective for our annual periods beginning October 1, 2025, and requires prospective application with the option to apply the standard retrospectively. We are currently evaluating the impact of the ASU on our disclosures.