What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-11-16 compared with 2021-11-18 · 152 added, 146 removed, 397 unchanged (43% of the section changed)

5 unchanged sentences

Discussions of fiscal 2021 compared to 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2020 Form 10-K, filed with the United States Securities and Exchange Commission on November 19, 2020.

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

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

Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended September 30, 2021, filed with the United States Securities and Exchange Commission.

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

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

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

Financial overview.

A summary of our as-reported U.S.

GAAP and non-GAAP operating results are as follows:

GAAP and non-GAAP operating results is as follows:

For the Years Ended

15 unchanged sentences

(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 an evolving coronavirus (“COVID-19”) pandemic continues, 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 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 this Form 10-K.

Russia & Ukraine.

During the quarter ended March 31, 2022, economic sanctions were imposed on Russia by the U.S., European Union, United Kingdom and other jurisdictions and authorities, impacting Visa and its clients.

In March 2022, we suspended our operations in Russia and as a result, are no longer generating revenue from domestic and cross-border activities related to Russia.

Since 2015, domestic transactions have been processed by Russia’s state-owned payments operator, National Payment Card System.

With respect to cross-border activities, all transactions initiated with Visa cards issued by financial institutions outside Russia no longer work within Russia, and all transactions on cards issued by financial institutions in Russia may be processed on a domestic network, unrelated to Visa, and no longer work outside the country.

Furthermore, during the quarter ended March 31, 2022 we deconsolidated our Russian subsidiary, as required under U.S.

For fiscal 2022 and 2021, total net revenues from Russia, including revenues driven by domestic as well as cross-border activities, were approximately 2% and 4% of our consolidated net revenues, respectively.

The continuing effects of the war in Ukraine are difficult to predict due to numerous uncertainties identified in Part I, Item 1A “Risk Factors” in this Form 10-K.

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

Highlights for fiscal 2022 .

Net revenues were $24.1 billion, an increase of 10% over the prior year, primarily due to the year-over-year growth in payments volume, processed transactions and cross-border volume, helped by

fewer COVID-19 restrictions, partially offset by higher client incentives.

Exchange rate movements and our hedging program positively impacted our net revenues growth by approximately half a percentage point.

GAAP operating expenses were $8.3 billion and increased 7% over the prior year, primarily driven by higher personnel and marketing expenses, partially offset by lower general and administrative expenses.

Non-GAAP operating expenses were $8.1 billion and increased 5% over the prior year, primarily driven by higher personnel and marketing expenses, partially offset by lower general and administrative expenses.

Exchange rate movements negatively impacted our operating expense growth by approximately half a percentage point.

Net revenues increased 22% over the prior year, primarily due to the year-over-year growth in nominal payments volume, processed transactions and nominal cross-border volume, partially offset by higher client incentives.

Exchange rate movements, partially offset by our hedging program, negatively impacted our net revenues growth by approximately two-and-a-half percentage points.

GAAP operating expenses increased 26% over the prior year, primarily driven by higher expenses for litigation provision and personnel.

See Results of Operations—Operating Expenses below for further discussion.

Non-GAAP operating expenses increased 16% over the prior year, primarily driven by higher expenses related to personnel and general and administrative.

Exchange rate movements positively impacted our operating expense growth by approximately two-and-a-half percentage points.

Release of preferred stock.

In July 2022, we released $3.5 billion of the as-converted value from our series B and C preferred stock and issued 176,655 shares of series A preferred stock in connection with the second mandatory release assessment, as required by the litigation management deed entered into at the time of the Visa Europe acquisition.

See Note 5—U.S.

and Europe Retrospective Responsibility Plans and Note 15—Stockholders’ Equity to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

Senior notes.

In June 2022, we issued €3.0 billion in Euro-denominated fixed-rate senior notes with maturities ranging between 4 and 12 years.

See Note 10—Debt to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

Acquisitions.

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

On March 10, 2022, we acquired 100% of the share capital of Tink AB (Tink) for $1.9 billion in cash.

Tink is an open banking platform that enables financial institutions, fintechs and merchants to build financial products and services and move money.

See Note 2—Acquisitions to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

Interchange multidistrict litigation.

During fiscal 2022, we recorded additional accruals of $861 million to address claims associated with the interchange multidistrict litigation.

We also made deposits of $850 million into the U.S.

litigation escrow account.

See Note 5—U.S.

and Europe Retrospective Responsibility Plans and Note 20—Legal Matters to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report .

Common stock repurchases.

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

During fiscal 2022, we repurchased 56 million shares of our class A common stock in the open market for $11.6 billion.

As of September 30, 2022, our share repurchase program had remaining authorized funds of $5.2 billion.

In October 2022, our board of directors authorized a new $12.0 billion share repurchase program.

See Note 15—Stockholders’ Equity to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

Non-GAAP financial results.

7 unchanged sentences

Amortization of acquired intangible assets consists of amortization of intangible assets such as developed technology, customer relationships and brands acquired in connection with business combinations executed beginning in fiscal 2019.

Amortization charges for our acquired intangible assets are non-cash and are significantly affected by the timing, frequency and size of our acquisitions, rather than our core operations.

Amortization charges for our acquired intangible assets are non-cash and are significantly affected by the timing, frequency and

size of our acquisitions, rather than our core operations.

As such, we have excluded this amount and the related tax impact to facilitate an evaluation of our current operating performance and comparison to our past operating performance.

2 unchanged sentences

These costs include professional fees, technology integration fees, restructuring activities and other direct costs related to the purchase and integration of acquired entities.

It also includes retention equity and deferred equity compensation when they are agreed upon as part of the purchase price of the transaction but are required to be recognized as expense post-combination.

These costs also include retention equity and deferred equity compensation when they are agreed upon as part of the purchase price of the transaction but are required to be recognized as expense post-combination.

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

• Litigation provision.

During fiscal 2022, we recorded additional accruals to address claims associated with the interchange multidistrict litigation of $861 million and related tax benefit of $191 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 rate at which shares of our class B common stock convert into shares of class A common stock.

See Note 5—U.S.

and Europe Retrospective Responsibility Plans and Note 20—Legal Matters to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

• Russia-Ukraine charges.

During fiscal 2022, we recorded a loss within general and administrative expense of $35 million from the deconsolidation of our Russian subsidiary.

See Note 1—Summary of Significant Accounting Policies to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

We also incurred charges of $25 million in personnel expense as a result of steps taken to support our employees in Russia and Ukraine.

We have excluded these amounts and the related tax benefit of $4 million, determined by applying applicable tax rates, as they are one-time charges and do not reflect the underlying performance of our business.

• Remeasurement of deferred tax balances.

1 unchanged sentence

During fiscal 2020, in connection with the UK enacted legislation that repealed the previous tax rate reduction from 19% to 17% that was effective on April 1, 2020, we remeasured our UK deferred tax liabilities as of the enactment date, resulting in the recognition of a non-recurring, non-cash income tax expense of $329 million.

See Note 19—Income Taxes to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

• Indirect taxes.

During fiscal 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.

During fiscal 2021, we recognized a one-time charge within general and administrative expense of $152 million, and related tax benefit of $40 million, determined by applying applicable tax rates.

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.

3 unchanged sentences

The resolution of this matter resulted in the recognition of a one-time charge to income tax expense of $28 million, which we believe is not representative of our continuing operations and ongoing effective tax rate.

• Litigation provision.

During fiscal 2019, we recorded a litigation provision of $370 million and related tax benefits of $83 million associated with the interchange multidistrict litigation.

The tax impact is determined by applying applicable federal and state tax rates to the litigation provision.

Under the U.S.

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

covered litigation through a reduction 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 20—Legal Matters to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

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.

10 unchanged sentences

Acquisition-related costs (69) — 9 60 0.03

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

Indirect taxes (152) — 40 112 0.05

Litigation provision (861) — 191 670 0.31

Russia-Ukraine charges (60) — 4 56 0.03

Non-GAAP $ 9,387 $ (413) $ 3,476 17.8 % $ 16,034 $ 7.50

9 unchanged sentences

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

Resolution of a tax item — — (28) 28 0.01

Indirect taxes (152) — 40 112 0.05

Non-GAAP $ 8,077 $ (453) $ 2,642 17.0 % $ 12,933 $ 5.91

8 unchanged sentences

Acquisition-related costs (17) — 4 13 0.01

Litigation provision (370) — 83 287 0.13

Remeasurement of deferred tax balances — — (329) 329 0.15

Resolution of a tax item — — (28) 28 0.01

Non-GAAP $ 7,702 $ (392) $ 2,559 18.6 % $ 11,193 $ 5.04

1 unchanged sentence

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

Common stock repurchases.

In January 2021, our board of directors authorized an $8.0 billion share repurchase program (the “January 2021 Program”).

During fiscal 2021, we repurchased 40 million shares of our class A common stock in the open market for $8.7 billion.

As of September 30, 2021, our January 2021 Program had remaining authorized funds of $4.8 billion for share repurchase.

See Note 15—Stockholders’ Equity to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

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”).

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.

Terminated acquisition.

On January 12, 2021, Visa and Plaid Inc.

mutually terminated their merger agreement announced on January 13, 2020.

See Note 20—Legal Matters to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

Payments volume and processed transactions.

3 unchanged sentences

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.

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

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

1 unchanged sentence

International Visa Inc.

Twelve Months

Ended June 30, (1)

Twelve Months

Ended June 30, (1)

Twelve Months

Ended June 30, (1)

14 unchanged sentences

International Visa Inc.

Twelve Months

Ended June 30, (1)

Twelve Months

Ended June 30, (1)

Twelve Months

Ended June 30, (1)

15 unchanged sentences

International Visa Inc.

12 months ended

Twelve Months Ended

2022 vs 2021 (1),(2)

12 months ended

Twelve Months Ended

2021 vs 2020 (1),(2)

12 months ended

Twelve Months Ended

2022 vs 2021 (1),(2)

12 months ended

Twelve Months Ended

2021 vs 2020 (1),(2)

14 unchanged sentences

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

Therefore, service revenues reported for the 12 months ended September 30, 2021, 2020 and 2019, were based on nominal payments volume reported by our financial institution clients for the 12 months ended June 30, 2021, 2020 and 2019, respectively.

Therefore, service revenues reported for the twelve months ended September 30, 2022, 2021 and 2020, were based on nominal payments volume reported by our financial institution clients for the twelve months ended June 30, 2022, 2021 and 2020, respectively.

On occasion, previously presented volume information may be updated.

Prior period updates are not material.

(2) Figures in the tables may not recalculate exactly due to rounding.

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

Percentage changes and totals are calculated based on unrounded numbers.

5 unchanged sentences

(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 processed transactions:

The following table presents the number of processed transactions:

For the Years Ended

21 unchanged sentences

Percentage changes are calculated based on unrounded numbers.

Net revenues increased in fiscal 2021 primarily due to the year-over-year growth in payments volume, processed transactions and cross-border volume, helped by fewer COVID-19 restrictions, partially offset by higher client incentives.

Net revenues increased in fiscal 2022 primarily due to the year-over-year 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.

In fiscal 2021, exchange rate movements and our hedging program positively impacted our net revenues growth by approximately half a percentage point.

In fiscal 2022, exchange rate movements, partially offset by our hedging program, negatively impacted our net revenues growth by approximately two-and-a-half percentage points.

The following table presents the components of our net revenues:

12 unchanged sentences

• Service revenues increased primarily due to 15% growth in nominal payments volume.

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

• Data processing revenues increased due to 17% growth in processed transactions, as the business laps the initial impacts of COVID-19 starting in March 2020.

• International transaction revenues increased primarily due to growth in nominal cross-border volumes, excluding transactions within Europe, of 4%, as the business laps the initial impacts of COVID-19 starting in March 2020 and border restrictions were relaxed in various markets.

• 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 conjunction with the increase in payments volume during fiscal 2021.

• Data processing revenues increased primarily due to 17% growth in processed transactions, partially offset by our suspension of operations in Russia and unfavorable currency fluctuations.

• International transaction revenues increased primarily due to growth in nominal cross-border volumes, excluding transactions within Europe, of 40%.

International transaction revenues also increased due to volatility of a broad range of currencies and select pricing modifications.

• Other revenues increased primarily due to select pricing modifications, travel related card benefits, value added services revenues tied to marketing services, consulting revenues and other value added services.

• Client incentives increased primarily due to growth in payments volume during fiscal 2022.

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.

1 unchanged sentence

Our operating expenses consist of the following:

• Personnel expenses include salaries, employee benefits, incentive compensation, share-based compensation, contractor expense and severance charges.

• Personnel expenses include salaries, employee benefits, incentive compensation, share-based compensation and contractor expenses.

• Marketing expenses include expenses associated with advertising and marketing campaigns, sponsorships and other related promotions of the Visa brand.

3 unchanged sentences

Also included in this amount is amortization of finite-lived intangible assets primarily obtained through acquisitions.

• General and administrative expenses consist mainly of card benefits, indirect taxes, facilities costs, travel and meeting costs, foreign exchange gains and losses and other corporate expenses incurred in support of our business.

• Litigation provision represents litigation expenses and is based on management’s understanding of our litigation profile, the specifics of the cases, advice of counsel to the extent appropriate and management’s best estimate of incurred loss.

• General and administrative expenses consist mainly of card benefits, facilities costs, indirect taxes, travel and meeting costs, foreign exchange gains and losses and other corporate expenses incurred in support of our business.

• Litigation provision represents litigation expenses and is an estimate based on management’s understanding of our litigation profile, the specifics of each case, advice of counsel to the extent appropriate and management’s best estimate of incurred loss.

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

9 unchanged sentences

General and administrative 1,194 985 1,096 21 % (10 %)

Litigation provision 3 11 400 (76 %) (97 %)

Litigation provision 868 3 11 NM (76 %)

Total operating expenses (2)

$ 10,497 $ 8,301 $ 7,765 26 % 7 %

NM - Not meaningful

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

2 unchanged sentences

See Overview within this Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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

• Marketing expenses increased 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 held in Summer 2021.

• General and administrative expenses decreased due to lower travel expenses, favorable foreign currency fluctuations and lower usage of travel related card benefits, 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 as we invested in future growth and due to the provision for U.S.

covered litigation.

• Personnel expenses increased primarily due to higher number of employees and compensation, reflecting our strategy to invest in future growth, including acquisitions.

The increase also included expenses incurred as a result of steps taken to support our employees in Russia and Ukraine.

• Marketing expenses increased due to higher spending in various campaigns, including the FIFA World Cup 2022 TM and the Olympic and Paralympic Winter Games Beijing 2022, and client marketing.

• Professional fees increased primarily due to consulting fees related to technology and other corporate projects.

• General and administrative expenses increased due to higher usage of travel related card benefits, higher travel expenses, the suspension of our operations in Russia and deconsolidation of our Russian subsidiary and the inclusion of expenses from our acquisitions, partially offset by a one-time charge of indirect taxes in the prior year.

• Litigation provision increased primarily due to additional accruals of $861 million related to the U.S.

covered litigation.

See Note 5—U.S.

and Europe Retrospective Responsibility Plans and Note 20—Legal Matters included in Item 8—Financial Statements and Supplementary Data of this report.

Non-operating Income (Expense)

Non-operating income (expense) primarily includes interest expense, gains and losses earned on investments, income from derivative instruments not associated with our core business, as well as the non-service components of net periodic pension income and expense.

Non-operating income (expense) primarily includes interest expense related to borrowings, income from derivative instruments, interest expense from tax liabilities, gains and losses on investments, as well as the non-service components of net periodic pension income and expense.

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

3 unchanged sentences

(in millions, except percentages)

Interest expense, net $ (513) $ (516) $ (533) (1 %) (3 %)

Investment income and other 772 225 416 243 % (46 %)

Interest expense $ (538) $ (513) $ (516) 5 % (1 %)

Investment income (expense) and other (139) 772 225 (118 %) 243 %

Total non-operating income (expense) $ (677) $ 259 $ (291) (361 %) (189 %)

1 unchanged sentence

Percentage changes are calculated based on unrounded numbers.

• Interest expense, net decreased primarily as a result of lower interest related to income tax liabilities, partially offset by an increase in interest expense due to the issuance of debt in fiscal 2020 .

• Interest expense increased primarily due to higher interest expense related to income tax liabilities and the issuance of debt in fiscal 2022, combined with lower income from derivative instruments that decreased the cost of borrowing on a portion of our outstanding debt.

See Note 10—Debt to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

• Investment income and other increased primarily due to higher gains from our equity investments, partially offset by lower interest income on our cash and investments.

• Investment income (expense) and other decreased primarily due to losses on our equity investments, offset by higher interest income on our cash and investments.

See Note 6—Fair Value Measurements and Investments to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

5 unchanged sentences

Effective income tax rate 18 % 23 % 21 %

The effective tax rate in fiscal 2021 differs from the effective tax rate in fiscal 2020 mainly due to the following:

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

The effective tax rate in fiscal 2022 differs from the effective tax rate in fiscal 2021 primarily due to the following:

• during fiscal 2022, a decrease in the state tax apportionment ratio, including a $176 million tax benefit related to prior years, as a result of a tax position taken related to a recent ruling;

• during fiscal 2021, a $1.0 billion non-recurring, non-cash tax expense related to the remeasurement of UK deferred tax liabilities as a result of the increase in UK tax rate from 19% to 25%, effective April 1, 2023;

• during fiscal 2021, $255 million of tax benefits recognized as a result of the conclusion of audits by taxing authorities.

• during fiscal 2020, a $329 million non-recurring, non-cash tax expense related to the remeasurement of UK deferred tax liabilities, as discussed below.

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

On July 22, 2020, the UK enacted legislation that repealed the previous tax rate reduction from 19% to 17% that was effective on April 1, 2020.

As a result, in fiscal 2021 and fiscal 2020, we recorded non-recurring, non-cash tax expense related to the remeasurement of our UK deferred tax liabilities, primarily related to intangibles recorded upon the acquisition of Visa Europe Limited (“Visa Europe”) in fiscal 2016.

Liquidity and Capital Resources

24 unchanged sentences

Operating activiti es.

Cash provided by operating activities in fiscal 2021 was higher than the prior fiscal year primarily due to growth in our underlying business, lower client incentive payments and timing and impact of COVID-19 on settlement in the prior fiscal year.

Cash provided by operating activities in fiscal 2022 was higher than the prior fiscal year primarily due to growth in our underlying business, partially offset by higher litigation payments.

Investing activities.

Cash was used in investing activities in fiscal 2021 compared to cash provided by investing activities in fiscal 2020, primarily due to higher purchases, net of proceeds from sales and maturities of investment securities.

Cash used in investing activities in fiscal 2022 was higher than the prior fiscal year primarily due to lower proceeds from sales and maturities of investment securities, combined with higher purchases of investment securities and higher cash paid for acquisitions, net of cash and restricted cash acquired.

See Note 2—Acquisitions and Note 4—Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

Financing activities.

Cash used in financing activities in fiscal 2021 was higher than the prior fiscal year primarily due to the absence of proceeds received from the issuance of senior notes in the prior year, the $3.0 billion principal debt payment upon maturity of our senior notes and higher share repurchases.

Cash used in financing activities in fiscal 2022 was lower than the prior fiscal year primarily due to proceeds received from the issuance of senior notes and lower principal debt payment upon maturity of our senior notes, partially offset by higher share repurchases and higher dividends paid.

See Note 10—Debt and Note 15—Stockholders’ Equity to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

1 unchanged sentence

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 return that these holdings provide.

Cash, cash equivalents and investments.

13 unchanged sentences

We maintain a commercial paper program to support our working capital requirements and for other general corporate purposes.

Under the program, we are authorized to issue up to $3.0 billion in outstanding notes, with maturities up to 397 days from the date of issuance.

At September 30, 2021, we had no outstanding obligations under the program.

During the year ended September 30, 2022, we issued and repaid $950 million of commercial paper.

As of September 30, 2022, we had no outstanding obligations under the program.

See Note 10—Debt to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

Credit facility.

We have an unsecured $5.0 billion revolving credit facility (the “Credit Facility”) which expires on July 25, 2024.

As of September 30, 2021, there were no borrowings under the Credit Facility.

We have an unsecured $5.0 billion revolving credit facility (Credit Facility) which expires on July 25, 2024.

As of September 30, 2022, there were no amounts outstanding under the Credit Facility.

See Note 10—Debt to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

Senior notes.

In June 2022, we issued €3.0 billion ($3.2 billion) in Euro-denominated fixed-rate senior notes, with maturities ranging between 4 and 12 years.

See Note 10—Debt to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

Litigation escrow account.

19 unchanged sentences

In general, during fiscal 2022, we were not required to fund settlement-related working capital.

At September 30, 2021, we held $9.1 billion of our total available liquidity to fund daily settlement in the event one or more of our financial institution clients are unable to settle, with the remaining liquidity available to support our working capital and other liquidity needs.

As of September 30, 2022, we held $9.2 billion of our total available liquidity to fund daily settlement in the event one or more of our financial institution clients are unable to settle, with the remaining liquidity available to support our working capital and other liquidity needs.

See Note 12—Settlement Guarantee Management to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report .

2 unchanged sentences

and Europe retrospective responsibility plans, could give rise to future liquidity needs.

During fiscal 2022, we deposited $850 million into the U.S.

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

The balance of this account as of September 30, 2022 was $1.4 billion and is reflected as restricted cash in our consolidated balance sheets.

See Note 5—U.S.

1 unchanged sentence

Common stock repurchases.

During fiscal 2021, we repurchased 40 million shares of our class A common stock in the open market for $8.7 billion.

As of September 30, 2021, our January 2021 Program had remaining authorized funds of $4.8 billion.

During fiscal 2022, we repurchased shares of our class A common stock in the open market for $11.6 billion.

As of September 30, 2022, our repurchase program had remaining authorized funds of $5.2 billion.

In October 2022, our board of directors authorized a new $12.0 billion share repurchase program.

Share repurchases will be executed at prices we deem appropriate subject to various factors, including market conditions and our financial performance, and may be effected through accelerated share repurchase programs, open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans .

See Note 15—Stockholders’ Equity to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

During fiscal 2021, we declared and paid $2.8 billion in dividends at a quarterly rate of $0.32 per share.

During fiscal 2022, we declared and paid $3.2 billion in dividends to holders of our common and preferred stock.

On October 21, 2022, our board of directors declared a quarterly cash dividend of $0.45 per share of class A common stock (determined in the case of class B and C common stock and series A, B and C convertible participating preferred stock on an as-converted basis).

4 unchanged sentences

Capital expenditures.

During fiscal 2021, our capital expenditures decreased slightly.

We expect to continue investing in technology assets and payments system infrastructure to support our digital solutions and core business initiatives.

During fiscal 2022, our capital expenditures increased.

We expect to continue investing in technology assets and payments system infrastructure.

Senior notes.

As of September 30, 2021, we had an outstanding aggregate principal amount relating to our fixed-rate senior notes of $21.0 billion with maturity dates ranging from September 2022 to August 2050.

During fiscal 2021, we repaid $3.0 billion of principal upon maturity of our senior notes.

A principal payment of $1.0 billion is

due on September 14, 2022 on our fixed-rate senior notes issued in December 2015, for which we have sufficient liquidity.

In August 2020, we issued a $500 million green bond as part of our commitment to sustainable living and a sustainable payments ecosystem.

In fiscal 2021, we allocated $165 million to eligible green projects.

As of September 30, 2022, we had an outstanding aggregate principal amount relating to our senior notes of $22.9 billion.

During fiscal 2022, we repaid $1.0 billion of principal upon maturity of certain senior notes.

A principal payment on certain senior notes of $2.3 billion is due in December 2022, for which we have sufficient liquidity.

As of September 30, 2022, we allocated $243 million to eligible green projects from the $500 million green bond issued as part of our commitment to environmental sustainability and a sustainable payments ecosystem.

See Note 10—Debt to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

Client incentives.

As the future cash payments for these agreements, which range in terms from less than one to fifteen years, are based on specific performance requirements, the timing of payments can vary.

As of September 30, 2021, we had $5.4 billion of client incentives liability recorded on the consolidated balance sheet related to these agreements.

As of September 30, 2022, we had short-term and long-term liabilities recorded on the consolidated balance sheet related to these agreements of $6.1 billion and $0.2 billion, respectively.

See Note 1—Summary of Significant Accounting Policies to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

Uncertain tax positions.

As of September 30, 2021, we had liabilities for uncertain tax positions of $1.8 billion for which we cannot determine the range and timing of the cash payments.

As of September 30, 2022, we had long-term liabilities for uncertain tax positions of $1.8 billion.

See Note 19—Income Taxes to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

Pending acquisitions.

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.

Acquisitions.

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), and on March 10, 2022, we acquired 100% of the share capital of Tink for $1.9 billion in cash.

See Note 2—Acquisitions to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

Other uses of cash.

The following table represents material, expected or contractually committed future obligations as of September 30, 2021.

We believe that we will be able to fund these obligations through cash generated from our operations and available credit facility.

Payments Due by Period

Years More than

5 Years Total

(in millions)

Purchase obligations.

$ 1,730 $ 685 $ 384 $ 569 $ 3,368

Leases not yet commenced (2)

1 41 58 367 467

Transition tax (3)

87 249 455 — 791

Total $ 1,818 $ 975 $ 897 $ 936 $ 4,626

(1) Represents agreements to purchase goods and services that specify significant terms, including:

fixed or minimum quantities to be purchased, minimum or variable price provisions, and the approximate timing of the transaction.

As of September 30, 2022, we had short-term and long-term obligations of $1.6 billion and $1.1 billion, respectively, related to agreements to purchase goods and services that specify significant terms, including fixed or minimum quantities to be purchased, minimum or variable price provisions, and the approximate timing of the transaction.

For obligations where the individual years of spend are not specified in the contract, we have estimated the timing of when these amounts will be spent.

(2) Represents future payments under leases that have not yet commenced and are not included in the consolidated balance sheet.

For future obligations related to software licenses, see Note 18—Commitments to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

As of September 30, 2022, we had short-term and long-term obligations of $3 million and $528 million, respectively, related to leases that have not yet commenced.

For future lease payments related to leases that have commenced and are included in the consolidated balance sheet, see Note 9—Leases to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

(3) Amounts presented relate to the estimated transition tax, net of foreign tax credit carryovers, on certain foreign earnings of non-U.S.

subsidiaries recognized during fiscal 2018 in connection with the Tax Cuts and Jobs Act.

Tax Cuts and Jobs Act.

As of September 30, 2022, we had short-term and long-term obligations of $87 million and $589 million, respectively, related to the estimated transition tax, net of foreign tax credit carryovers, on certain foreign earnings of non-U.S.

subsidiaries recognized during fiscal 2018.

Indemnifications

4 unchanged sentences

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 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.

27 unchanged sentences

Critical estimates.

We are currently involved in various legal proceedings, the outcomes of which are not within our complete control or may not be known for prolonged periods of time.

We are currently involved in various legal proceedings, the outcomes of which are not within our complete control and may not be known for prolonged periods of time.

Management is required to assess the probability of loss and estimate the amount of such loss, if any, in preparing our consolidated financial statements.

2 unchanged sentences

We record a liability for such claims when a loss is deemed probable and the amount can be reasonably estimated.

Significant judgment may be required in the determination of both probability and whether a potential loss is reasonably estimable.

Our judgments are subjective based on management’s understanding of the litigation profile, the specifics of each case, our history with similar proceedings, advice of in-house and outside legal counsel to the extent appropriate and management’s best estimate of incurred loss.

Significant judgment may be required in the determination of both probability and whether a loss is reasonably estimable.

Our judgments are subjective and based on a number of factors, including management’s understanding of the legal or regulatory profile and the specifics of each proceeding, our history with similar matters, advice of internal and external legal counsel and management’s best estimate of incurred loss.

As additional information becomes available, we reassess the potential loss related to pending claims and may revise our estimates.

12 unchanged sentences

Impact if actual results differ from assumptions.

Due to the inherent uncertainties of the legal and regulatory processes in the multiple jurisdictions in which we operate, our judgments may be materially different than the actual outcomes, which could have material adverse effects on our business, financial conditions and results of operations.

See Note 20—Legal Matters to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data .

3 unchanged sentences

We have various tax filing positions with regard to the timing and amount of deductions and credits and the allocation of income among various tax jurisdictions, based on our interpretation of local tax laws.

We also inventory, evaluate and measure all uncertain tax positions taken or expected to be taken on tax returns and to record liabilities for the amount of such positions that may not be sustained, or may only be partially sustained, upon examination by the relevant taxing authorities.

We also inventory, evaluate and measure all uncertain tax positions taken or expected to be taken on tax returns and record liabilities for the amount of such positions that may not be sustained, or may only be partially sustained, upon examination by the relevant taxing authorities.

Impact if actual results differ from assumptions.

3 unchanged sentences

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-K

Item 7. Management’s Discussion and Analysis