What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-01-28 compared with 2021-07-29 · 122 added, 179 removed, 193 unchanged (61% of the section changed)

5 unchanged sentences

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the U.S.

Private Securities Litigation Reform Act of 1995 that relate to, among other things, the impact on our future financial position, results of operations and cash flows as a result of the ongoing effects of the coronavirus (“COVID-19”) pandemic, the measures taken in response, as well as the speed and strength of an economic recovery;

prospects, developments, strategies and growth of our business;

7 unchanged sentences

and expectations regarding the impact of recent accounting pronouncements on our consolidated financial statements.

Forward-looking statements generally are identified by words such as “believes,” “estimates,” “expects,” “intends,” “may,” “projects,” “could,” “should,” “will,” “continue” and other similar expressions.

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.

1 unchanged sentence

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.

Visa is a global payments technology company that enables innovative, secure and reliable electronic payments across more than 200 countries and territories.

We facilitate digital payments across a global network of consumers, merchants, financial institutions, businesses, strategic partners and government entities through innovative technologies.

Our advanced transaction processing network, VisaNet, enables authorization, clearing and settlement of payment transactions and allows us to provide our financial institution and merchant clients a wide range of products, platforms and value added services.

Visa is a global payments technology company that facilitates global commerce and money movement across more than 200 countries and territories among a global network of consumers, merchants, financial institutions and government entities through innovative technologies.

We provide transaction processing services (primarily authorization, clearing and settlement) to our financial institutions and merchants through VisaNet, our advanced transaction processing network.

We offer products and solutions that facilitate secure, reliable and efficient money movement for all participants in the ecosystem.

Financial overview.

Our as-reported U.S.

GAAP and non-GAAP net income and diluted earnings per share are as follows:

A summary of our as-reported U.S.

GAAP and non-GAAP operating results is as follows:

Three Months Ended

June 30, Nine Months Ended

(in millions, except percentages and per share data)

Net income, as reported $ 2,575 $ 2,373 9 % $ 8,727 $ 8,729 — %

Diluted earnings per share, as reported

Net revenues $ 7,059 $ 5,687 24 %

Operating expenses $ 2,283 $ 1,843 24 %

Net income $ 3,959 $ 3,126 27 %

Diluted earnings per share $ 1.83 $ 1.42 29 %

Non-GAAP operating expenses (2)

$ 2,115 $ 1,828 16 %

5 unchanged sentences

Percentage changes are calculated based on unrounded numbers.

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

COVID-19 continues to have an impact globally.

While we have been actively monitoring the worldwide spread of COVID-19, the extent to which COVID-19 continues to impact our business remains difficult to predict.

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

As the effects of the evolving coronavirus (“COVID-19”) pandemic continue, much remains uncertain.

Our priority remains the safety of our employees, clients and the communities in which we live and operate.

We are taking a measured approach in bringing our employees back in the office, with most of our employees currently working remotely.

We continue to remain in close and regular contact with our employees, clients, partners and with governments globally to help them navigate these challenging times.

During the quarter, the year-over-year growth in payments volume, processed transactions, and cross-border volume all improved at various paces globally.

The impact that COVID-19 continues to have on our business remains difficult to predict due to numerous uncertainties, including the transmissibility, severity, duration and resurgence of the outbreak, new variants of the virus, the effectiveness of social distancing measures or actions that are voluntarily adopted by the public or required by governments or public health authorities, the availability and rollout of effective treatments or vaccines, the timing of an economic recovery, and the impact to our employees and our operations, the business of our clients, supplier and business partners, and other factors identified in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended September 30 2020, filed with the SEC on November 19, 2020.

We are taking a phased approach to reopening our offices, with most of our employees currently working remotely.

We continue to remain in close and regular contact with our employees, clients, partners and governments globally to help them navigate these challenging times.

The ongoing effects of COVID-19 remain difficult to predict due to numerous uncertainties, including the transmissibility, severity, duration and resurgence of the outbreak, new variants of the virus, the uptake and effectiveness of health and safety measures or actions that are voluntarily adopted by the public or required by governments or public health authorities, including vaccines and treatments, the speed and strength of an economic recovery, including the reopening of borders and the resumption of international travel, and the impact to our employees and our operations, the business of our clients, suppliers and business partners, and other factors identified in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended September 30 2021.

We will continue to evaluate the nature and extent of the impact to our business.

Highlights for the first nine months of fiscal 2021.

For the three and nine months ended June 30, 2021, net revenues were $6.1 billion and $17.5 billion, respectively, and increased 27% and 5% over the prior-year comparable periods, respectively.

The three-month year-over-year changes were primarily due to the growth in nominal payments volume, processed transactions and nominal cross-border volume, as the business laps the initial impacts of COVID-19 starting in March 2020 and various markets relaxed restrictions, partially offset by higher client incentives.

The nine-month year-over-year changes were primarily due to the growth in nominal payments volume and processed transactions, partially offset by higher client incentives and lower nominal cross-border volume.

During the three and nine months ended June 30, 2021, exchange rate movements, which are partially mitigated by our hedging program, positively impacted our net revenues by approximately one percentage point and one half of a percentage point, respectively.

For the three months ended June 30, 2021, GAAP operating expenses were $2.1 billion and increased 12% over the prior-year comparable period, primarily driven by higher personnel expenses and higher marketing expenses, partially offset by lower general and administrative expenses.

For the nine months ended June 30, 2021, GAAP operating expenses were $6.1 billion and increased 4% over the prior-year comparable period, primarily driven by higher personnel expenses, partially offset by lower general and administrative expenses.

For the three months ended June 30, 2021, non-GAAP operating expenses were $2.0 billion and increased 12% over the prior-year comparable period, primarily due to higher personnel expenses and higher marketing expenses, partially offset by lower general and administrative expenses.

For the nine months ended June 30, 2021, non-GAAP operating expenses were $5.9 billion and increased 2% over the prior-year comparable period, primarily driven by higher personnel expenses, partially offset by lower general and administrative expenses.

Highlights for the first quarter of fiscal 2022.

For the three months ended December 31, 2021, net revenues were $7.1 billion, an increase of 24% over the prior-year comparable period, primarily due to the growth in nominal payments volume, processed transactions and nominal cross-border volume, partially offset by higher client incentives.

During the three months ended December 31, 2021, exchange rate movements and our hedging program negatively impacted our net revenues growth by approximately one percentage point.

For the three months ended December 31, 2021, GAAP operating expenses were $2.3 billion, an increase of 24% over the prior-year comparable period, primarily driven by higher litigation provision, higher personnel expenses reflecting our strategy to invest in future growth and higher marketing expenses as we lapped planned reductions in spending in the prior year.

For the three months ended December 31, 2021, non-GAAP operating expenses were $2.1 billion, an increase of 16% over the prior-year comparable period, primarily due to higher personnel expenses reflecting our strategy to invest in future growth and higher marketing expenses as we lapped planned reductions in spending in the prior year.

Closed acquisition.

On December 20, 2021, we acquired The Currency Cloud Group Limited (“Currencycloud”), a UK-based global platform that enables banks and fintechs to provide innovative foreign exchange solutions for cross-border payments, for a total purchase consideration of $893 million (which includes the fair value of our previously held equity interest in Currencycloud).

See Note 2—Acquisitions to our unaudited consolidated financial statements.

Pending acquisition.

On June 24, 2021, we entered into a definitive agreement to acquire Tink AB (“Tink”) for €1.8 billion, inclusive of cash and retention incentives.

Tink is a European open banking platform that enables financial institutions, fintechs and merchants to build tailored financial management tools, products and services for European consumers and businesses based on their financial data.

This acquisition is subject to customary closing conditions, including regulatory reviews and approvals.

Interchange multidistrict litigation.

During the three months ended December 31, 2021, we recorded an additional accrual of $145 million to address claims associated with the interchange multidistrict litigation.

We also deposited $250 million into the U.S.

litigation escrow account.

See Note 5—U.S.

and Europe Retrospective Responsibility Plans and Note 13—Legal Matters to our unaudited consolidated financial statements .

Common stock repurchases.

In December 2021, our board of directors authorized a new $12.0 billion share repurchase program .

Previously, in January 2021, our board of directors authorized an $8.0 billion share repurchase program.

During the three months ended December 31, 2021, we repurchased 19 million shares of our class A common stock in the open market for $4.1 billion.

As of December 31, 2021, our repurchase programs had remaining authorized funds of $12.7 billion.

See Note 9—Stockholders’ Equity to our unaudited consolidated financial statements.

Non-GAAP financial results.

14 unchanged sentences

We have excluded these amounts and the related tax impacts as the expenses are recognized for a limited duration and do not reflect the underlying performance of our business.

• Remeasurement of deferred tax balances.

During the three and nine months ended June 30, 2021, in connection with the UK enacted legislation on June 10, 2021 that will increase the tax rate from 19% to 25%, effective April 1, 2023, we remeasured our net deferred tax liabilities, resulting in the recognition of a non-recurring, non-cash income tax expense of $1.0 billion.

• Indirect taxes.

During the nine months ended June 30, 2021, we recognized a one-time charge within general and administrative expense of $152 million, before tax.

Net of the related income tax benefit of $40 million, determined by applying applicable tax rates, non-GAAP net income increased by $112 million.

This charge is to record our estimate of probable additional indirect taxes, related to prior periods, for which we could be liable as a result of certain changes in applicable law.

This one-time charge is not representative of our ongoing operations.

Non-GAAP operating expense, 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.

• Litigation provision.

During the three months ended December 31, 2021, we recorded an additional accrual to address claims associated with the interchange multidistrict litigation of $145 million, and related tax benefit of $32 million determined by applying applicable tax rates.

Under the U.S.

retrospective responsibility plan, we recover the monetary liabilities related to the U.S.

covered litigation through a downward adjustment to the conversion rate of our class B common stock to shares of class A common stock.

See Note 5—U.S.

and Europe Retrospective Responsibility Plans and Note 13—Legal Matters to our unaudited consolidated financial statements.

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.

The following tables reconcile our as-reported financial measures, calculated in accordance with U.S.

GAAP, to our respective non-GAAP financial measures for the three and nine months ended June 30, 2021 and 2020.

Three Months Ended June 30, 2021

Operating Expenses Non-operating Income (Expense) Income Tax Provision Effective Income Tax Rate (1)

Income Diluted Earnings Per Share (1)

(in millions, except percentages and per share data)

As reported $ 2,066 $ 325 $ 1,814 41.3 % $ 2,575 $ 1.18

(Gains) losses on equity investments, net — (439) (99) (340) (0.16)

Amortization of acquired intangible assets (13) — 3 10 —

Acquisition-related costs (5) — 1 4 —

Remeasurement of deferred tax balances — — (1,007) 1,007 0.46

Non-GAAP $ 2,048 $ (114) $ 712 17.9 % $ 3,256 $ 1.49

Nine Months Ended June 30, 2021

Operating Expenses Non-operating Income (Expense) Income Tax Provision Effective Income Tax Rate (1)

Income Diluted Earnings Per Share (1)

(in millions, except percentages and per share data)

As reported $ 6,057 $ 276 $ 3,038 25.8 % $ 8,727 $ 3.98

(Gains) losses on equity investments, net — (611) (138) (473) (0.22)

Amortization of acquired intangible assets (38) — 9 29 0.01

Acquisition-related costs (13) — 3 10 —

Remeasurement of deferred tax balances — — (1,007) 1,007 0.46

Indirect taxes (152) — 40 112 0.05

Non-GAAP $ 5,854 $ (335) $ 1,945 17.1 % $ 9,412 $ 4.29

Three Months Ended June 30, 2020

GAAP, to our respective non-GAAP financial measures:

Three Months Ended December 31, 2021

Operating Expenses Non-operating Income (Expense) Income Tax Provision Effective Income Tax Rate (1)

5 unchanged sentences

Acquisition-related costs (10) — 2 8 —

Litigation provision (145) — 32 113 0.05

Non-GAAP $ 2,115 $ (110) $ 933 19.3 % $ 3,901 $ 1.81

Nine Months Ended June 30, 2020

Three Months Ended December 31, 2020

Operating Expenses Non-operating Income (Expense) Income Tax Provision Effective Income Tax Rate (1)

8 unchanged sentences

Effective income tax rate, diluted earnings per share and their respective totals are calculated based on unrounded numbers.

Pending acquisitions.

On June 24, 2021, we entered into a definitive agreement to acquire Tink AB (“Tink”) for €1.8 billion, inclusive of cash and retention incentives.

This acquisition is subject to customary closing conditions, including regulatory reviews and approvals.

On July 22, 2021, we entered into a definitive agreement to acquire The Currency Cloud Group Limited (“Currencycloud”), a UK-based global platform that enables banks and fintechs to provide innovative foreign exchange solutions for cross-border payments.

The acquisition values Currencycloud at £700 million, inclusive of cash and retention incentives.

The financial consideration will be reduced by the outstanding equity of Currencycloud that we already own.

This acquisition is subject to customary closing conditions, including regulatory reviews and approvals.

Common stock repurchases.

During the three months ended June 30, 2021, we repurchased 10 million shares of our class A common stock in the open market for $2.2 billion.

As of June 30, 2021, our repurchase program had remaining authorized funds of $7.8 billion.

See Note 9—Stockholders’ Equity to our unaudited consolidated financial statements.

Payments volume and processed transactions.

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

For the three and nine months ended March 31, 2021 (1) , nominal payments volume growth in the U.S.

was 18% and 11%, respectively, driven mainly by consumer debit.

For the three and nine months ended March 31, 2021, nominal international payments volume growth was 10% and 4%, respectively, positively impacted by movements in U.S.

dollar exchange rates.

For the same comparable periods, international payments volume growth on a constant-dollar basis, which excludes the impact of exchange rate movements, was 6% and 3%, respectively.

Processed transactions increased as the business laps the initial impacts of COVID-19 starting in March 2020 and the increase also reflects the ongoing worldwide shift to electronic payments.

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/local currency exchange rate for each local currency in which our volumes are reported.

Processed transactions represent transactions using cards and other form factors carrying the Visa, Visa Electron, V PAY, Interlink and PLUS brands processed on Visa’s networks.

The following table presents nominal payments and cash volume:

International Visa Inc.

Three Months Ended March 31, (1)

Three Months Ended September 30, (1)

2021 2020 % Change (2)

12 unchanged sentences

Cash volume (5)

Total nominal volume (2),(5)

180 165 9 % 496 482 3 % 676 647 5 %

International Visa Inc.

Nine Months Ended March 31, (1)

2021 2020 % Change (2)

(in billions, except percentages)

Nominal payments volume

Consumer credit $ 1,175 $ 1,200 (2) % $ 1,777 $ 1,874 (5) % $ 2,952 $ 3,074 (4) %

Consumer debit (3)

1,717 1,356 27 % 1,782 1,528 17 % 3,500 2,884 21 %

Commercial (4)

501 502 — % 296 299 (1) % 797 801 — %

Total nominal payments volume (2)

3,393 3,057 11 % 3,855 3,702 4 % 7,248 6,759 7 %

Cash volume 466 431 8 % 1,443 1,649 (12) % 1,909 2,081 (8) %

Total nominal volume (2),(6)

$ 1,506 $ 1,262 19 % $ 1,955 $ 1,734 13 % $ 3,460 $ 2,996 15 %

The following table presents nominal and constant payments and cash volume growth:

International Visa Inc.

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

International Visa Inc.

Ended March 31,

Nominal Constant (6)

Ended September 30,

Nominal Constant (7)

8 unchanged sentences

Cash volume growth (5)

3 % 4 % 5 % 5 %

Total volume growth 13 % 11 % 15 % 14 %

(1) Service revenues in a given quarter are assessed based on nominal payments volume in the prior quarter.

Therefore, service revenues reported for the three and nine months ended June 30, 2021 and 2020, respectively, were based on nominal payments volume reported by our financial institution clients for the three and nine months ended March 31, 2021 and 2020, respectively.

Therefore, service revenues reported for the three months ended December 31, 2021 and 2020, respectively, were based on nominal payments volume reported by our financial institution clients for the three months ended September 30, 2021 and 2020, 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.

2 unchanged sentences

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

(5) Total nominal volume is the sum of total nominal payments volume and cash volume.

Total nominal payments volume is the total monetary value of transactions for goods and services that are purchased on cards and other form factors carrying the Visa, Visa Electron, Interlink and V PAY brands.

(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.

On occasion, previously presented volume information may be updated.

Prior-period updates are not material.

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

The following table provides the number of transactions involving cards and other form factors carrying the Visa, Visa Electron, Interlink, V PAY and PLUS cards processed on Visa’s networks during the periods presented:

The following table presents the number of processed transactions:

Three Months Ended

June 30, Nine Months Ended

(in millions, except percentages)

2 unchanged sentences

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

The following table sets forth our net revenues earned in the U.S.

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

and internationally:

Three Months Ended

June 30, Nine Months Ended

(in millions, except percentages)

4 unchanged sentences

Percentage changes are calculated based on unrounded numbers.

During the three-month comparable periods, net revenues increased primarily due to the growth in nominal payments volume, processed transactions and nominal cross-border volume, driven by fewer COVID-19 restrictions, partially offset by higher client incentives.

During the nine-month comparable periods, net revenues increased primarily due to the growth in nominal payments volume and processed transactions, partially offset by higher client incentives and lower nominal cross-border volume.

Net revenues increased primarily due to the growth in nominal payments volume, processed transactions and nominal cross-border volume, partially offset by higher client incentives.

Our net revenues are impacted by the overall strengthening or weakening of the U.S.

dollar as payments volume and related revenues denominated in local currencies are converted to U.S.

The following table sets forth the components of our net revenues:

During the three months ended December 31, 2021, exchange rate movements and our hedging program negatively impacted our net revenues growth by approximately one percentage point.

The following table presents the components of our net revenues:

Three Months Ended

June 30, Nine Months Ended

(in millions, except percentages)

8 unchanged sentences

Percentage changes are calculated based on unrounded numbers.

• Service revenues increased primarily due to 14% and 7% growth in nominal payments volume during the three and nine-month comparable periods, respectively.

Service revenues were also impacted by select pricing modifications and business mix.

• Data processing revenues increased mainly due to overall growth in processed transactions of 39% and 16% during the three and nine-month comparable periods, respectively, as the business laps the initial impacts of COVID-19 starting in March 2020 and various markets relaxed restrictions.

For the three-month comparable period, the growth of data processing revenues was negatively impacted by an unfavorable business mix.

• International transaction revenues increased primarily due to growth in nominal cross-border volumes, excluding transactions within Europe, of 62% during the three-month comparable period, as the business laps the initial impacts of COVID-19 starting in March 2020 and border restrictions were relaxed in various markets.

The decrease for the nine-month comparable period is mainly due to a decline in nominal cross-border volumes, excluding transactions within Europe, of 7%.

International transaction revenues were also impacted by fluctuations in the volatility of a broad range of currencies and business mix .

• Other revenues increased as the business laps the initial impacts of COVID-19 starting in March 2020, driven by higher consulting and data services revenues.

• Client incentives increased in correlation with the increase in payments volumes during the three and nine-month comparable periods.

• Service revenues increased primarily due to 18% growth in nominal payments volume.

• Data processing revenues increased primarily due to overall growth in processed transactions of 21%.

• International transaction revenues increased primarily due to growth in nominal cross-border volumes, excluding transactions within Europe, of 49%.

• Other revenues increased primarily due to higher consulting revenues and other value added services.

• Client incentives increased primarily due to growth in payments volume.

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 execution of new contracts.

Operating Expenses

The following table sets forth components of our total operating expenses:

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

Three Months Ended

June 30, Nine Months Ended

(in millions, except percentages)

4 unchanged sentences

Depreciation and amortization

204 197 7 3 % 602 571 31 5 %

General and administrative

204 258 (54) (21) % 770 840 (70) (8) %

Litigation provision (2) 1 (3) (309) % 2 9 (7) (73) %

Litigation provision 148 1 NM

Total operating expenses $ 2,283 $ 1,843 24 %

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 primarily due to increases in headcount and higher incentive compensation, reflecting our strategy to invest in future growth.

• Marketing expenses increased during the three months ended June 30, 2021 as we lapped reductions in spending in the prior year at the outset of COVID-19 as well as higher spending in client marketing and various campaigns, including the Olympic Games Tokyo 2020, which were postponed until summer 2021.

During the nine months ended June 30, 2021, marketing expenses decreased primarily due to the planned delay in spending to the second half of fiscal 2021 .

• Network and processing expenses increased mainly due to continued technology and processing network investments to support growth.

• Professional fees, which were primarily third party fees related to various corporate projects, increased during the three months ended June 30, 2021 mainly due to the planned delay of our spending to the second half of fiscal 2021.

During the nine months ended June 30, 2021, professional fees decreased reflecting non-recurring expenses in the prior year, partially offset by planned delay of our spending to the second half of fiscal 2021.

• Depreciation and amortization expenses increased primarily due to additional depreciation and amortization from our on-going investments, including acquisitions.

• General and administrative expenses decreased in the three months ended June 30, 2021, primarily as a result of favorable foreign currency fluctuations and lower indirect taxes, partially offset by increased usage of travel related product benefits.

In the nine months ended June 30, 2021, expenses decreased due to lower travel expenses, lower usage of travel related product benefits and favorable foreign currency fluctuations, partially offset by a one-time charge to record our estimate of probable additional indirect taxes, related to prior periods, for which we could be liable as a result of certain changes in applicable laws.

Total operating expenses increased primarily due to our planned reduction and delay of our spend as revenue was impacted by the COVID-19 pandemic in the first half of the prior year.

• Personnel expenses increased primarily due to higher headcount and compensation, reflecting our strategy to invest in future growth.

• Marketing expenses increased as we lapped planned reductions in spending in the prior year as well as higher spending in various campaigns .

• Network and processing expenses increased mainly due to higher continued technology and processing network investments to support growth.

• Professional fees increased primarily due to higher consulting fees as we lapped planned reductions in spending in the prior year.

• General and administrative expenses increased primarily as a result of higher usage of travel related card benefits and unfavorable foreign currency fluctuations, partially offset by lower indirect taxes.

• Litigation provision increased primarily due to an additional $145 million accrual related to the U.S.

covered litigation.

See Note 5—U.S.

and Europe Retrospective Responsibility Plans and Note 13—Legal Matters to our unaudited consolidated financial statements.

Non-operating Income (Expense)

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

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

Three Months Ended

June 30, Nine Months Ended

(in millions, except percentages)

2 unchanged sentences

Total non-operating income (expense) $ 121 $ (96) (225 %)

$ 325 $ (67) $ 392 (591) % $ 276 $ (204) $ 480 (235) %

(1) Figures in the table may not recalculate exactly due to rounding.

Percentage changes are calculated based on unrounded numbers.

• Interest expense, net decreased during the three months ended June 30, 2021 primarily as a result of lower interest related to income tax liabilities.

Interest expense, net increased during the nine-month comparable period primarily due to the issuance of debt in fiscal 2020, partially offset by lower interest due to discrete tax benefits.

• Investment income and other increased in the three and nine months ended June 30, 2021 primarily due to higher gains on our equity investments, partially offset by lower interest income on our cash and investments.

• Interest expense, net decreased primarily as a result of lower interest expense due to lower outstanding debt and derivative instruments that lowered the cost of borrowing, partially offset by an increase in interest expense related to income tax liabilities.

• Investment income and other increased primarily due to higher gains on our equity investments.

Effective Income Tax Rate

The following table sets forth our effective income tax rates:

The following table presents our effective income tax rates:

Three Months Ended

June 30, Nine Months Ended

2021 2020 2021 2020

Effective income tax rate 19 % 17 %

The effective income tax rates for the three and nine months ended June 30, 2021 differ from the effective tax rates for the same periods in the prior year primarily due to the following:

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

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

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

On June 10, 2021, the UK enacted legislation that will increase the tax rate from 19% to 25%, effective April 1, 2023.

As a result, we recorded a non-recurring, non-cash tax expense related to the remeasurement of our net UK deferred tax liabilities, primarily related to intangibles recorded upon the acquisition of Visa Europe in fiscal 2016.

The difference in the effective tax rates is primarily due to an $81 million tax benefit recognized during the three months ended December 31, 2020 as a result of the conclusion of audits by taxing authorities.

Liquidity and Capital Resources

1 unchanged sentence

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

Nine Months Ended

Three Months Ended

(in millions)

7 unchanged sentences

Operating activities.

Cash provided by operating activities for the nine months ended June 30, 2021 was higher than the prior-year comparable period primarily due to growth in our underlying business, lower client incentive payments and the timing and impact of COVID-19 on settlement in the prior-year period.

Cash provided by operating activities for the three months ended December 31, 2021 was higher than the prior-year comparable period primarily due to growth in our underlying business, partially offset by higher client incentive payments.

Investing activities.

Cash provided by investing activities for the nine months ended June 30, 2021 decreased primarily due to higher purchases of investment securities, partially offset by higher sales and maturities of investment securities as compared to the prior-year period.

Cash was used in investing activities for the three months ended December 31, 2021 as compared to cash provided by investing activities during the prior-year comparable period, primarily due to higher cash paid for acquisitions and lower proceeds from sales and maturities, net of purchases of investment securities.

See Note 2—Acquisitions to our unaudited consolidated financial statements.

Financing activities.

Cash used in financing activities for the nine months ended June 30, 2021 was higher than the prior-year comparable period primarily due to the $3.0 billion principal debt payment upon maturity of our senior notes in December 2020 and the absence of proceeds received from the issuance of senior notes in the prior year, partially offset by lower share repurchases.

See Note 7—Debt and Note 9—Stockholders’ Equity to our unaudited consolidated financial statements .

Cash used in financing activities for the three months ended December 31, 2021 was lower than the prior-year comparable period primarily due to the absence of the principal debt payment made in the prior year, partially offset by higher share repurchases and higher dividends paid.

See 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 operations, our investment portfolio and access to various equity and borrowing arrangements.

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.

4 unchanged sentences

Common stock repurchases.

During the nine months ended June 30, 2021, we repurchased 27 million shares of our class A common stock for $5.7 billion.

As of June 30, 2021, our repurchase program had remaining authorized funds of $7.8 billion.

In December 2021, our board of directors authorized a new $12.0 billion share repurchase program.

During the three months ended December 31, 2021, we repurchased 19 million shares of our class A common stock in the open market for $4.1 billion.

As of December 31, 2021, our repurchase programs had remaining authorized funds of $12.7 billion.

See Note 9—Stockholders’ Equity to our unaudited consolidated financial statements.

During the nine months ended June 30, 2021, we declared and paid $2.1 billion in dividends to holders of our common and preferred stock.

On July 23, 2021, our board of directors declared a cash dividend in the amount of $0.32 per share of class A common stock (determined in the case of class B and C common stock and series A, UK&I and Europe preferred stock on an as-converted basis), which will be paid on September 1, 2021, to all holders of record as of August 13, 2021.

During the three months ended December 31, 2021, we declared and paid $809 million in dividends to holders of our common and preferred stock.

On January 25, 2022, our board of directors declared a cash dividend in the amount of $0.375 per share of class A common stock (determined in the case of class B and C common stock and series A, B and C convertible participating preferred stock on an as-converted basis), which will be paid on March 1, 2022, to all holders of record as of February 11, 2022.

See Note 9—Stockholders’ Equity to our unaudited consolidated financial statements.

2 unchanged sentences

Senior notes .

During the nine months ended June 30, 2021, we repaid $3.0 billion of principal upon maturity of our senior notes due December 14, 2020.

Principal payments on our fixed-rate senior notes of $1.0 billion and $2.3 billion are due in September 2022 and December 2022, respectively, for which we have sufficient liquidity.

See Note 7—Debt to our unaudited consolidated financial statements.

Pending Acquisitions .

During December 2021, we deposited $250 million into the U.S.

litigation escrow account to address claims associated with the interchange multidistrict litigation.

See Note 5—U.S.

and Europe Retrospective Responsibility Plans and Note 13—Legal Matters to our unaudited consolidated financial statements.

Closed acquisition .

On December 20, 2021, we acquired Currencycloud for a total purchase consideration of $893 million (which includes the fair value of our previously held equity interest in Currencycloud).

See Note 2—Acquisitions to our unaudited consolidated financial statements.

Pending acquisition.

On June 24, 2021, we entered into a definitive agreement to acquire Tink for €1.8 billion, inclusive of cash and retention incentives.

This acquisition is subject to customary closing conditions, including regulatory reviews and approvals.

On July 22, 2021, we entered into a definitive agreement to acquire Currencycloud for a value of £700 million, inclusive of cash and retention incentives.

The financial consideration will be reduced by the outstanding equity of Currencycloud that we already own.

This acquisition is subject to customary closing conditions, including regulatory reviews and approvals.

Accounting Pronouncements Not Yet Adopted

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Board Update (“ASU”) 2019-12, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in the existing guidance for income taxes and making other minor improvements.

The amendments in the ASU are effective on October 1, 2021.

The adoption is not expected to have a material impact on our consolidated financial statements.

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

The amendments in the ASU are effective on October 1, 2021.

The adoption is not expected to have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, which provides optional expedients and exceptions for applying U.S.

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate or another reference rate expected to be discontinued because of reference rate reform.

2 unchanged sentences

We are evaluating the effect ASU 2020-04 and its subsequent amendment will have on our consolidated financial statements.

The adoption is not expected to have a material impact on our consolidated financial statements.

Quantitative and Qualitative Disclosures about Market Risk

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis