VISA INC. - Quarter Report: 2024 March (Form 10-Q)

Settlement receivable Accounts receivable Customer collateral Current portion of client incentives Prepaid expenses and other current assets Total current assets Investment securities Client incentives Property, equipment and technology, net Goodwill Intangible assets, net Other assets Total assets$ $ LiabilitiesAccounts payable$ $ Settlement payable Customer collateral Accrued compensation and benefits Client incentives Accrued liabilities Accrued litigation Total current liabilities Long-term debt Deferred tax liabilities Other liabilities Total liabilities

Commitments and contingencies (Note 13)

par value, shares issued and outstanding as of March 31, 2024 and September 30, 2023

Common stock, $ par value:

Class A common stock, and shares issued and outstanding as of March 31, 2024 and September 30, 2023, respectively

Class B-1 common stock, shares issued and outstanding as of March 31, 2024 and September 30, 2023

Class C common stock, and shares issued and outstanding as of March 31, 2024 and September 30, 2023, respectively

Right to recover for covered losses()()Additional paid-in capital Accumulated income Accumulated other comprehensive income (loss): Investment securities()()Defined benefit pension and other postretirement plans()()Derivative instruments()()Foreign currency translation adjustments()()Total accumulated other comprehensive income (loss)()()Total equity Total liabilities and equity$ $

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

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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	$	$	$	$

Operating Expenses
Personnel
Marketing
Network and processing
Professional fees
Depreciation and amortization
General and administrative
Litigation provision

Total operating expenses
Operating income

Non-operating Income (Expense)
Interest expense	()	()	()	()
Investment income (expense) and other
Total non-operating income (expense)		()		()
Income before income taxes
Income tax provision
Net income	$	$	$	$

Basic Earnings Per Share
Class A common stock	$	$	$	$
Class B-1 common stock	$	$	$	$
Class C common stock	$	$	$	$

Basic Weighted-average Shares Outstanding
Class A common stock
Class B-1 common stock
Class C common stock

Diluted Earnings Per Share
Class A common stock	$	$	$	$
Class B-1 common stock	$	$	$	$
Class C common stock	$	$	$	$

Diluted Weighted-average Shares Outstanding
Class A common stock
Class B-1 common stock
Class C common stock

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

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VISA

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


	Three Months Ended March 31,		Six Months Ended March 31,
	2024	2023	2024	2023
	(in millions)
Net income	$	$	$	$
Other comprehensive income (loss):
Investment securities:
Net unrealized gain (loss)	()
Income tax effect		()	()	()


Defined benefit pension and other postretirement plans:
Net unrealized actuarial gain (loss) and prior service credit (cost)
Income tax effect	()		()	()
Reclassification adjustments
Income tax effect	()		()
Derivative instruments:
Net unrealized gain (loss)		()	()	()
Income tax effect	()
Reclassification adjustments	()			()
Income tax effect		()	()	()
Foreign currency translation adjustments:
Translation adjustments	()
Income tax effect	()
Other comprehensive income (loss)	()
Comprehensive income	$	$	$	$

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

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VISA

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)



	Three Months Ended March 31, 2024
	Preferred Stock			Common Stock and Additional Paid-in Capital			Right to Recover for Covered Losses		Accumulated Income	Accumulated Other Comprehensive Income (Loss)		Total Equity
	Shares		Amount	Shares		Amount
	(in millions, except per share data)
Balance as of December 31, 2023			$			$	$	()	$	$	()	$
Net income
Other comprehensive income (loss)										()		()
VE territory covered losses incurred							()					()


Conversion to class A common stock		(1)	()
Share-based compensation
Stock issued under equity plans
Restricted stock and performance-based shares settled in cash for taxes					(1)	()						()
Cash dividends declared and paid, at a quarterly amount of $ per class A common stock									()			()
Repurchase of class A common stock				()		()			()			()
Balance as of March 31, 2024			$			$	$	()	$	$	()	$

(1)

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

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VISA

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

(UNAUDITED)


	Six Months Ended March 31, 2024
	Preferred Stock				Common Stock and Additional Paid-in Capital		Right to Recover for Covered Losses		Accumulated Income	Accumulated Other Comprehensive Income (Loss)		Total Equity
	Shares		Amount		Shares	Amount
	(in millions, except per share data)
Balance as of September 30, 2023			$	(1)		$	$	()	$	$	()	$
Net income
Other comprehensive income (loss)
VE territory covered losses incurred							()					()
Recovery through conversion rate adjustment			()

Conversion to class A common stock		(2)	()
Share-based compensation
Stock issued under equity plans
Restricted stock and performance-based shares settled in cash for taxes					()	()						()
Cash dividends declared and paid, at a quarterly amount of $ per class A common stock									()			()
Repurchase of class A common stock					()	()			()			()
Balance as of March 31, 2024			$	(1)		$	$	()	$	$	()	$

(1) million and $ million, respectively. Refer to Note 5—U.S. and Europe Retrospective Responsibility Plans.

(2)

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

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VISA

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

(UNAUDITED)



	Three Months Ended March 31, 2023
	Preferred Stock			Common Stock and Additional Paid-in Capital			Right to Recover for Covered Losses		Accumulated Income	Accumulated Other Comprehensive Income (Loss)		Total Equity
	Shares		Amount	Shares		Amount
	(in millions, except per share data)
Balance as of December 31, 2022			$			$	$	()	$	$	()	$
Net income
Other comprehensive income (loss)
VE territory covered losses incurred							()					()


Conversion to class A common stock		(1)	()
Share-based compensation
Stock issued under equity plans
Restricted stock and performance-based shares settled in cash for taxes					(1)	()						()
Cash dividends declared and paid, at a quarterly amount of $ per class A common stock									()			()
Repurchase of class A common stock				()		()			()			()
Balance as of March 31, 2023			$			$	$	()	$	$	()	$

(1)

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

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VISA

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

(UNAUDITED)


	Six Months Ended March 31, 2023
	Preferred Stock				Common Stock and Additional Paid-in Capital			Right to Recover for Covered Losses		Accumulated Income	Accumulated Other Comprehensive Income (Loss)		Total Equity
	Shares		Amount		Shares		Amount
	(in millions, except per share data)
Balance as of September 30, 2022			$	(1)			$	$	()	$	$	()	$
Net income
Other comprehensive income (loss)

VE territory covered losses incurred								()					()
Recovery through conversion rate adjustment			()

Conversion to class A common stock		(2)	()
Share-based compensation
Stock issued under equity plans
Restricted stock and performance-based shares settled in cash for taxes						(2)	()						()
Cash dividends declared and paid, at a quarterly amount of $ per class A common stock										()			()
Repurchase of class A common stock					()		()			()			()
Balance as of March 31, 2023			$	(1)			$	$	()	$	$	()	$

(1) million and $ 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)

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

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VISA

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Six Months Ended March 31,
	2024	2023
	(in millions)
Operating Activities
Net income	$	$
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Client incentives
Share-based compensation
Depreciation and amortization
Deferred income taxes	()	()
VE territory covered losses incurred	()	()
(Gains) losses on equity investments, net
Other		()
Change in operating assets and liabilities:
Settlement receivable	()
Accounts receivable		()
Client incentives	()	()
Other assets	()	()
Accounts payable	()	()
Settlement payable		()
Accrued and other liabilities	()	()
Accrued litigation
Net cash provided by (used in) operating activities
Investing Activities
Purchases of property, equipment and technology	()	()
Investment securities:
Purchases	()	()
Proceeds from maturities and sales
Acquisitions, net of cash and restricted cash acquired	()
Purchases of other investments	()	()
Settlement of derivative instruments
Other investing activities	()
Net cash provided by (used in) investing activities	()	()
Financing Activities
Repurchase of class A common stock	()	()
Repayments of debt		()
Dividends paid	()	()
Cash proceeds from issuance of class A common stock under equity plans
Restricted stock and performance-based shares settled in cash for taxes	()	()
Other financing activities
Net cash provided by (used in) financing activities	()	()
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents	()	()
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	$
Supplemental Disclosure
Cash paid for income taxes, net	$	$
Interest payments on debt	$	$
Accruals related to purchases of property, equipment and technology	$	$

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

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VISA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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.

million. The Company allocated $ million of the purchase consideration to technology, customer relationships, other net assets acquired and deferred tax liabilities and the remaining $ million to goodwill.

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$ $ $

Data processing revenue

International transaction revenue

Other revenue

Client incentives()()()()

Net revenue

$ $ $ $


	Three Months Ended March 31,		Six Months Ended March 31,
	2024	2023	2024	2023
	(in millions)
U.S.	$	$	$	$
International
Net revenue	$	$	$	$

March 31,
2024September 30,
2023(in millions)Cash and cash equivalents$ $ Restricted cash and restricted cash equivalents:U.S. litigation escrow Customer collateral Prepaid expenses and other current assets

Cash, cash equivalents, restricted cash and restricted cash equivalents

$ $

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$ Deposits into the U.S. litigation escrow account

Payments to opt-out merchants(1), net of interest earned on escrow funds

()()

Balance as of end of period

$ $

(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 right to recover for covered losses, a contra-equity account 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 € 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.

$ $()

VE territory covered losses incurred(1)

()

Recovery through conversion rate adjustment

()()

Balance as of end of period

$ $ $()

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$ $()

VE territory covered losses incurred(1)

()

Recovery through conversion rate adjustment(2)

()()

Balance as of end of period

$ $ $()

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

$ $ $ Series C preferred stock Total Less: right to recover for covered losses()()()()Total recovery for covered losses available$ $ $ $

(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 March 31, 2024, the as-converted value of preferred stock is calculated as the product of: (a) million and million shares of the series B and C preferred stock outstanding, respectively; (b) and , the class A common stock conversion rate applicable to the series B and C preferred stock outstanding, respectively; and (c) $, 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) million and million shares of the series B and C preferred stock outstanding, respectively; (b) and , the class A common stock conversion rate applicable to the series B and C preferred stock outstanding, respectively; and (c) $, Visa’s class A common stock closing stock price.

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$ $ $

U.S. Treasury securities

Investment securities:

Marketable equity securities

U.S. government-sponsored debt securities

U.S. Treasury securities

Other current and non-current assets:

Money market funds

Derivative instruments

Total $ $ $ $ LiabilitiesAccrued compensation and benefits:

Deferred compensation liability

$ $ $ $ Accrued and other liabilities:

Derivative instruments

Total $ $ $ $

(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-1 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.

Effective price per share(1)

$ $ Deposits into the U.S. litigation escrow account$ $

(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.

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(1)

Effective price per share(2)

$ $ $ $

Recovery through conversion rate adjustment

$ $ $ $

(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.

Average repurchase cost per share(2)

$ $ $ $

Total cost(2)

$ $ $ $

(1)Shares repurchased in the open market reflect repurchases that settled during the three and six months ended March 31, 2024 and 2023. 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 $ billion providing multi-year flexibility, and $ billion, respectively. These authorizations have no expiration date. As of March 31, 2024, the Company’s share repurchase program had remaining authorized funds of $ billion. All share repurchase programs authorized prior to October 2023 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 by allowing holders to exchange a portion of their outstanding shares of class B common stock for shares of freely tradeable class C common stock. The certificate of incorporation amendments automatically redenominated all shares of class B common stock outstanding at the amendment date as class B-1 common stock with no changes to the par value, conversion features, rights and privileges of the class B-1 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 is tendered in exchange and retired. When referred to prior to January 23, 2024, class B common stock means the Company’s legacy class B common stock, and following January 23, 2024, means the Company’s class B-1 common stock, and to the extent issued in an exchange offer, class B-2 common stock, class B-3 common stock, class B-4 common stock and class B-5 common stock, collectively.

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million shares of preferred stock, of which the following series have been created and authorized: million shares of series A convertible participating preferred stock, million shares of series B convertible participating preferred stock and million shares of series C convertible participating preferred stock. As of March 31, 2024, the Company was authorized to issue trillion shares of class A common stock, million shares of class B-1 common stock, million shares of class B-2 common stock, million shares of class B-3 common stock, million shares of class B-4 common stock, million shares of class B-5 common stock and billion shares of class C common stock. As of September 30, 2023, the Company was authorized to issue trillion shares of class A common stock, million shares of class B-1 common stock and billion shares of class C common stock.

Dividends. During the three months ended March 31, 2024 and 2023, the Company declared and paid dividends of $ million and $ million, respectively. During the six months ended March 31, 2024 and 2023, the Company declared and paid dividends of $ billion and $ billion, respectively. On April 23, 2024, the Company’s board declared a quarterly cash dividend of $ per share of class A common stock (determined in the case of all other outstanding common and preferred stock on an as-converted basis), payable on June 3, 2024, to all holders of record as of May 17, 2024.

$ $

(3)

Class B-1 common stock

$ $ $ Class C common stock $ $ $ Participating securities Not presentedNot presented$ Not presentedNot presentedNet income$

The following table presents earnings per share for the six months ended March 31, 2024:


	Basic Earnings Per Share			Diluted Earnings Per Share
	Income Allocation (A)(1)	Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)(2)	Income Allocation (A)(1)	Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)(2)
	(in millions, except per share data)
Class A common stock	$		$	$		(3)	$
Class B-1 common stock			$	$			$
Class C common stock			$	$			$
Participating securities		Not presented	Not presented	$	Not presented		Not presented
Net income	$

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$ $

(3)

Class B-1 common stock

$ $ $ Class C common stock $ $ $ Participating securities Not presentedNot presented$ Not presentedNot presentedNet income$

The following table presents earnings per share for the six months ended March 31, 2023:


	Basic Earnings Per Share			Diluted Earnings Per Share
	Income Allocation (A)(1)	Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)(2)	Income Allocation (A)(1)	Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)(2)
	(in millions, except per share data)
Class A common stock	$		$	$		(3)	$
Class B-1 common stock			$	$			$
Class C common stock			$	$			$
Participating securities		Not presented	Not presented	$	Not presented		Not presented
Net income	$

(1)The weighted-average number of shares of as-converted class B-1 common stock used in the income allocation was million for the three and six months ended March 31, 2024 and million for the three and six months ended March 31, 2023. The weighted-average number of shares of as-converted class C common stock used in the income allocation was million and million for the three and six months ended March 31, 2024, respectively, and million for the three and six months ended March 31, 2023. The weighted-average number of shares of preferred stock included within participating securities was million of as-converted series A preferred stock for the three and six months ended March 31, 2024 and million and million of as-converted series A preferred stock for the three and six months ended March 31, 2023, respectively, million of as-converted series B preferred stock for the three and six months ended March 31, 2024 and 2023, and million of as-converted series C preferred stock for the three and six months ended March 31, 2024 and 2023.

(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 and six months ended March 31, 2024 and 2023.

$ $ Restricted stock units $

Performance-based shares(1)

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

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million and $ million, respectively. For the six months ended March 31, 2024 and 2023, the Company recorded share-based compensation cost related to the EIP of $ million and $ million, respectively.

% and %, respectively, and for the three and six months ended March 31, 2023, the effective income tax rates were % and %, respectively. The difference in the effective tax rates is primarily due to the following:

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

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

During the three and six months ended March 31, 2024, the Company’s gross unrecognized tax benefits decreased by $ million and $ million, respectively, and the Company’s net unrecognized tax benefits decreased by $ million and $ million, respectively. The change in unrecognized tax benefits is primarily due to the recognition of previously unrecognized tax benefits as a result of the conclusion of an audit, partially offset by an increase in gross timing differences as well as various tax positions across several jurisdictions. During the three and six months ended March 31, 2024, the Company’s accrued interest related to uncertain tax positions decreased by $ million and $ million, respectively. During the three and six months ended March 31, 2023, there were significant changes in accrued interest related to uncertain tax positions.

In January 2024, a resolution was reached regarding India tax assessments for taxable years falling within the period from 2010 to 2019. As a result, the Company withdrew its 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. It is not reasonably possible to estimate the increase or decrease in unrecognized tax benefits within the next 12 months.

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$ Provision for uncovered legal matters Provision for covered legal matters Payments for legal matters()()

Balance as of end of period

$ $

Accrual Summary—U.S. Covered Litigation

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

$ Provision for interchange multidistrict litigation Payments for U.S. covered litigation()()

Balance as of end of period

$ $

During the three and six months ended March 31, 2024, the Company recorded an additional accrual pursuant to the agreement to resolve the Injunctive Relief Class claims in the interchange multidistrict litigation. The accrual balance is consistent with the Company’s best estimate of its share of a probable and reasonably estimable loss with respect to the U.S. covered litigation. While this estimate is consistent with the Company’s view of the current status of the litigation, the probable and reasonably estimable loss or range of such loss could materially vary based on developments in the litigation. The Company will continue to consider and reevaluate this estimate in light of the substantial uncertainties with respect to the litigation. The Company is unable to estimate a potential loss or range of loss, if any, at trial if negotiated resolutions cannot be reached.

Accrual Summary—VE Territory Covered Litigation

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

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$ Provision for VE territory covered litigation Payments for VE territory covered litigation()()

Balance as of end of period

$ $

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. On February 22, 2024, the district court denied defendants' motions for summary judgment based on the post-IPO conspiracy claims. On February 26, 2024, plaintiffs in the action led by Old Jericho Enterprise, Inc. served a motion for partial summary judgment. On March 11, 2024, the district court denied the Injunctive Relief Class plaintiffs’ motion for partial summary judgment. On April 2, 2024, the district court granted defendants’ motion for summary judgment on Injunctive Relief Class plaintiffs’ monopolization claims.

On March 25, 2024, Visa and Mastercard entered into an agreement to resolve the Injunctive Relief Class claims (the “Settlement Agreement”), subject to court approval. The Settlement Agreement includes, among other terms, (i) a release from class members for claims for declaratory, injunctive or equitable relief arising out of conduct alleged by the Injunctive Relief Class in the litigation that have accrued or accrue in the future during the term of the Settlement Agreement; (ii) provisions requiring reductions and caps on U.S. credit interchange rates; and (iii) provisions requiring modifications to the Company’s rules in the U.S. that, among other things, streamline requirements for merchants who wish to impose a surcharge on credit transactions. On March 26, 2024, the Injunctive Relief Class plaintiffs filed a motion for preliminary approval of the settlement.

Interchange Multidistrict Litigation (MDL) - Individual Merchant Actions

Visa has reached settlements with a number of merchants representing approximately % 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 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. On February 22, 2024, the district court denied defendants' motions for summary judgment based on Illinois Brick standing and on the post-IPO conspiracy claims, and denied as moot certain plaintiffs’ motions for partial summary judgment. On April 2, 2024, the district court granted in part and denied in part defendants’ motion for summary judgment on certain plaintiffs’ monopolization claims.

Consumer Interchange Litigation

On February 9, 2024, defendants filed a motion to dismiss the complaint and to compel arbitration.

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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 Merchants, and there are approximately Merchants with outstanding claims. In addition, 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.

From February 14 to March 28, 2024, a trial occurred to consider whether certain interchange rates restrict competition in violation of UK antitrust law.

In the class action claims filed before the UK Competition Appeal Tribunal, a class certification rehearing took place in April 2024.

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. On March 5, 2024, MiCamp Solutions filed an amended complaint on behalf of the same purported class and subclass, and containing similar allegations as in the original complaint, and on March 19, 2024, Visa filed a motion to dismiss that amended complaint.

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 MDL. On February 2, 2024, the Judicial Panel on Multidistrict Litigation entered a conditional transfer order conditionally transferring the case to the MDL. On February 26, 2024, plaintiffs filed a motion to vacate the conditional transfer order.

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ITEM 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations

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.

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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	%

25 0.01 45 0.02 20 0.01 265 0.13 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.

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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	%

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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.

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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.

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•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.

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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)

+Filed or furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

VISA INC.

Date:

April 23, 2024

By:

/s/ Ryan McInerney

Name:

Ryan McInerney

Title:

Chief Executive Officer
(Principal Executive Officer)

Date:

April 23, 2024

By:

/s/ Chris Suh

Name:

Chris Suh

Title:

Chief Financial Officer

(Principal Financial Officer)

Date:

April 23, 2024

By:

/s/ Peter Andreski

Name:

Peter Andreski

Title:

Global Corporate Controller, Chief Accounting Officer
(Principal Accounting Officer)

VISA INC. - Quarter Report: 2024 March (Form 10-Q)

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