What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-11-15 compared with 2022-11-16 · 117 added, 167 removed, 382 unchanged (43% of the section changed)

1 unchanged sentence

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 and 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 the consolidated financial statements and related notes included in Item 8—Financial Statements and Supplementary Data of this report.

This section of this Form 10-K generally discusses fiscal 2022 compared to fiscal 2021.

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 Annual Report on Form 10-K for the year ended September 30, 2021, filed with the United States Securities and Exchange Commission.

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 the consolidated financial statements and related notes included in Item 8 of this report.

This section of the report generally discusses fiscal 2023 compared to fiscal 2022.

Discussions of fiscal 2022 compared to 2021 that are not included in this report can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 in our Annual Report on Form 10-K for the year ended September 30, 2022, 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.

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.

18 unchanged sentences

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

Disruption in the Banking Sector.

During fiscal 2023, certain U.S.

banks failed, which caused volatility in the global financial markets.

These events did not have an impact on our operating results.

We continuously monitor and manage balance sheet and operational risks from clients in our portfolio, including their settlement obligations.

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.

During fiscal 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.

The continuing effects of the liquidity issues at certain financial institutions and the war in Ukraine are difficult to predict due to numerous uncertainties identified in Part I, Item 1A of this report.

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

Highlights for fiscal 2023 .

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.

Net revenues increased 11% over the prior year, primarily due to the year-over-year growth in nominal cross-border volume, processed transactions and nominal payments volume, partially offset by

higher client incentives.

Exchange rate movements lowered our net revenues growth by approximately one-and-a-half percentage points.

GAAP operating expenses increased 11% over the prior year, primarily driven by higher expenses related to 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.

Non-GAAP operating expenses increased 12% over the prior year, primarily driven by higher expenses related to personnel.

Pending acquisition.

In June 2023, we entered into a definitive agreement to acquire Pismo Holdings (Pismo), a cloud-native issuer processing and core banking platform with operations in Latin America, Asia Pacific and Europe, for $1.0 billion in cash.

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

Interchange multidistrict litigation.

During fiscal 2023, we recorded additional accruals of $906 million to address claims associated with the interchange multidistrict litigation.

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

We also made deposits of $1.0 billion 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 .

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

Potential exchange offer program.

In September 2023, we announced that we are engaging with our common stockholders on the subject of potential amendments to our certificate of incorporation that would authorize Visa to conduct an exchange offer program that would have the effect of releasing transfer restrictions on portions of our class B common stock prior to the final resolution of the U.S.

covered litigation.

See our current report on Form 8-K filed with the SEC on September 13, 2023.

Common stock repurchases.

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

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

During fiscal 2023, we repurchased 55 million shares of our class A common stock in the open market for $12.2 billion.

As of September 30, 2023, our share repurchase program had remaining authorized funds of $5.0 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.

In October 2023, our board of directors authorized a new $25.0 billion share repurchase program, providing multi-year flexibility.

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

Non-GAAP financial results.

4 unchanged sentences

These long-term investments are strategic in nature and are primarily private company investments.

Gains and losses and the related tax impacts associated with these investments are tied to the performance of the companies that we invest in and therefore do not correlate to the underlying performance of our business.

Gains and losses associated with these investments are tied to the performance of the companies that we invest in and therefore do not correlate to the underlying performance of our business.

• Amortization of acquired intangible assets.

Amortization of acquired intangible assets consists of amortization of intangible assets such as 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.

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.

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

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

• Acquisition-related costs.

2 unchanged sentences

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.

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

• Litigation provision.

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.

We recorded additional accruals to address claims associated with the interchange multidistrict litigation.

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.

covered litigation through a downward adjustment to the rate at which shares of our class B common stock ultimately convert into shares of class A common stock.

For fiscal 2023 and 2022, basic earnings per class A common stock was unchanged and increased $0.01, respectively, as a result of the downward adjustments of the class B common stock conversion rate during the fiscal years.

For fiscal 2023 and 2022, diluted earnings per class A common stock remained unchanged.

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.

and Europe Retrospective Responsibility Plans and Note 20—Legal Matters to our consolidated financial statements included in Item 8 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.

We recorded a loss within general and administrative expense from the deconsolidation of our Russian subsidiary and also incurred charges in personnel expense as a result of steps taken to support our employees in Russia and Ukraine.

We have excluded these amounts as they are one-time charges and do not reflect the underlying performance of our business.

• Remeasurement of deferred tax balances.

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

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.

In connection with the UK enacted legislation on June 10, 2021 that increased the tax rate from 19% to 25%, effective April 1, 2023, we remeasured our UK deferred tax liabilities, resulting in the recognition of a non-recurring, non-cash income tax expense.

• Indirect taxes.

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.

W e recognized a one-time charge within general and administrative expense 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.

• Resolution of a tax item.

During fiscal 2020, we resolved a long-outstanding tax matter, dating back more than 12 years, relating to certain tax filing positions taken prior to our initial public offering.

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.

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.

3 unchanged sentences

September 30, 2023

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

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

Effective Income Tax Rate (2)

Net Income Diluted Earnings Per Share (2)

5 unchanged sentences

Litigation provision (906) — 201 705 0.34

Russia-Ukraine charges (60) — 4 56 0.03

Non-GAAP $ 10,481 $ 141 $ 4,033 18.1 % $ 18,280 $ 8.77

1 unchanged sentence

September 30, 2022

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

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

Effective Income Tax Rate (2)

Net Income Diluted Earnings Per Share (2)

4 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

1 unchanged sentence

September 30, 2021

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

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

Effective Income Tax Rate (2)

Net Income Diluted Earnings Per Share (2)

5 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

(1) Determined by applying applicable tax rates.

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

74 unchanged sentences

Total volume growth — % 7 % 9 % 13 % 4 % 7 % 12 % 14 %

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

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

Therefore, service revenues reported for the twelve months ended September 30, 2023, 2022 and 2021, were based on nominal payments volume reported by our financial institution clients for the twelve months ended June 30, 2023, 2022 and 2021, respectively.

21 unchanged sentences

Our net revenues are primarily generated from payments volume on Visa products for purchased goods and services, as well as the number of transactions processed on our network.

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 for further discussion on the components of our net revenues.

See Note 1—Summary of Significant Accounting Policies to our consolidated financial statements included in Item 8 of this report for further discussion on the components of our net revenues.

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

9 unchanged sentences

Percentage changes are calculated based on unrounded numbers.

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.

Net revenues increased in fiscal 2023 primarily due to the year-over-year growth in nominal cross-border volume, processed transactions and nominal payments 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 2022, exchange rate movements, partially offset by our hedging program, negatively impacted our net revenues growth by approximately two-and-a-half percentage points.

In fiscal 2023, exchange rate movements lowered our net revenues growth by approximately one-and-a-half percentage points.

The following table presents the components of our net revenues:

11 unchanged sentences

Percentage changes are calculated based on unrounded numbers.

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

• 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.

• Service revenues increased primarily due to 5% growth in nominal payments volume and due to business mix.

Service revenues increased over the prior-year comparable fiscal year despite the impact of our suspension of operations in Russia.

• Data processing revenues increased primarily due to 10% growth in processed transactions, select pricing modifications and growth in value added services.

Data processing revenues increased over the prior-year comparable fiscal year despite the impact of our suspension of operations in Russia.

• International transaction revenues increased primarily due to growth in nominal cross-border volumes of 23%, excluding transactions within Europe, and select pricing modifications, partially offset by business mix and lower volatility of a broad range of currencies.

• Other revenues increased primarily due to growth in marketing and consulting services and select pricing modifications.

• Client incentives increased primarily due to growth in payments volume during fiscal 2023.

3 unchanged sentences

• 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.

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

• Network and processing expenses mainly represent expenses for the operation of our processing network, including maintenance, equipment rental and fees for other data processing services.

• Professional fees mainly consist of fees for consulting, legal and other professional services.

• Depreciation and amortization expenses include amortization of purchased and internally developed software, as well as depreciation expense for property and equipment.

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, facilities costs, indirect taxes, travel and meeting costs, foreign exchange gains and losses and other corporate expenses incurred in support of our business.

• Professional fees mainly consist of fees for legal, consulting and other professional services.

• Depreciation and amortization expenses include amortization of internally developed and purchased software, depreciation expense for property and equipment and amortization of finite-lived intangible assets primarily obtained through acquisitions.

• General and administrative expenses consist mainly of card benefits such as costs associated with airport lounge access, extended cardholder protection and concierge services, facilities costs, travel and meeting costs, indirect taxes, 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.

16 unchanged sentences

Percentage changes are calculated based on unrounded numbers.

(2) Operating expenses for fiscal 2022 and 2021 include significant items that we do not believe are indicative of our operating performance.

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

Total operating expenses increased as we invested in future growth and due to the provision for U.S.

covered litigation.

(2) Operating expenses include significant items that we do not believe are indicative of our operating performance.

See Overview within this Item 7.

• 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.

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

• General and administrative expenses increased due to unfavorable foreign currency fluctuations, higher usage of travel related card benefits and travel expenses, partially offset by the absence of expenses as a result of the suspension of our operations in Russia.

• Litigation provision increased primarily due to higher accruals 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.

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

Non-operating Income (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.

Non-operating income (expense) primarily includes interest expense related to borrowings, gains and losses on investments and derivative instruments, interest expense from tax liabilities, 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):

8 unchanged sentences

Percentage changes are calculated based on unrounded numbers.

• 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 (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.

• Interest expense increased primarily due to losses from derivative instruments, partially offset by lower interest related to indirect taxes and lower outstanding debt.

See Note 10—Debt and Note 13—Derivative and Hedging Instruments to our consolidated financial statements included in Item 8 of this report.

• Investment income (expense) and other increased primarily due to higher interest income on our cash and investments and lower losses on our investments.

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

Effective Income Tax Rate

4 unchanged sentences

Effective income tax rate 18 % 18 % 23 %

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.

The effective income tax rates in fiscal 2023 and fiscal 2022 were 18% including the following:

• during fiscal 2023, a $142 million tax benefit related to prior years due to the reassessment of an uncertain tax position as a result of new information obtained during an ongoing tax examination;

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

Liquidity and Capital Resources

Management of Our Liquidity

We regularly evaluate cash requirements for current operations, commitments, development activities and capital expenditures, and we may elect to raise additional funds for these purposes in the future through the issuance of either debt or equity.

Our treasury policies provide management with the guidelines and authority to manage liquidity risk in a manner consistent with our corporate objectives.

The objectives of our treasury policies are to:

• provide adequate liquidity to cover operating expenditures and liquidity contingency scenarios;

• ensure timely completion of payments settlement activities;

• ensure payments on required litigation settlements;

• make planned capital investments in our business;

• pay dividends and repurchase our shares at the discretion of our board of directors;

• invest excess cash in securities that enable us to first meet our working capital and liquidity needs, and earn additional income.

Based on our current cash flow budgets and forecasts of our short-term and long-term liquidity needs, we believe that our current and projected sources of liquidity will be sufficient to meet our projected liquidity needs for more than the next 12 months.

1 unchanged sentence

Cash Flow Data

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

The following table summarizes our cash flow activity:

For the Years Ended

6 unchanged sentences

Financing activities $ (17,772) $ (12,696) $ (14,410)

Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents (1,287) (37) 440

Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents $ 578 $ 628 $ 8,339

Operating activiti es.

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.

Cash provided by operating activities in fiscal 2023 was higher than the prior fiscal year primarily due to growth in our underlying business, partially offset by higher incentive payments.

Investing activities.

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.

Cash used in investing activities in fiscal 2023 was lower than the prior fiscal year primarily due to the absence of cash paid for acquisitions, cash received from the settlement of net investment hedge derivative instruments in the current year and lower purchases of investment securities, partially offset by lower sales and maturities of investment securities.

Financing activities.

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.

Cash used in financing activities in fiscal 2023 was higher than the prior fiscal year primarily due to the absence of proceeds from the issuance of senior notes, higher principal debt payment upon maturity of our senior notes, higher dividends paid and higher share repurchases.

Sources of Liquidity

Our primary sources of liquidity are cash on hand, cash flow from our operations, our investment portfolio and access to various equity and borrowing arrangements.

Funds from operations are maintained in cash and cash equivalents and short-term or long-term investment securities based upon our funding requirements, access to liquidity from these holdings and the returns that these holdings provide.

Cash, cash equivalents and investments.

2 unchanged sentences

Our investment portfolio consists of debt securities issued by the U.S.

Treasury or U.S.

Treasury and U.S.

government-sponsored agencies.

$3.5 billion of the investments are classified as current and are available to meet short-term liquidity needs.

The remaining non-current investments have stated maturities of more than one year from the balance sheet date;

The remaining non-

current investments have stated maturities of more than one year from the balance sheet date;

however, they are also generally available to meet short-term liquidity needs.

5 unchanged sentences

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

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

As of September 30, 2023, 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.

See Note 10—Debt to our consolidated financial statements included in Item 8 of this report.

Credit facility.

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

We have an unsecured $7.0 billion revolving credit facility, which expires in May 2028.

As of September 30, 2023, 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.

See Note 10—Debt to our consolidated financial statements included in Item 8 of this report.

Litigation escrow account.

6 unchanged sentences

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 repor t.

Credit Ratings

Various factors affect our credit ratings, including changes in our operating performance, the economic environment, conditions in the electronic payments industry, our financial position and changes in our business strategy.

Our credit ratings are published by nationally recognized statistical rating organizations in the U.S.

and have not changed from the prior-year comparable period.

We do not currently foresee any reasonable circumstances under which our credit ratings would be significantly downgraded.

If a downgrade were to occur, it could adversely impact, among other things, our future borrowing costs and access to capital markets.

and Europe Retrospective Responsibility Plans and Note 20—Legal Matters to our consolidated financial statements included in Item 8 of this repor t.

Uses of Liquidity

5 unchanged sentences

As of September 30, 2023, we held $10.1 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.

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

Judgments in and settlements of litigation or other fines imposed in investigations and proceedings, other than the U.S.

covered litigation and VE territory covered litigation, which are covered by the U.S.

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

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

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

Judgments in and settlements of litigation or other fines imposed in investigations and proceedings could give rise to future liquidity needs.

During fiscal 2023, we deposited $1.0 billion into the U.S.

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

1 unchanged sentence

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 repor t.

and Europe Retrospective Responsibility Plans and Note 20—Legal Matters to our consolidated financial statements included in Item 8 of this repor t.

Common stock repurchases.

During fiscal 2023, we repurchased shares of our class A common stock in the open market for $12.2 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.

As of September 30, 2023, our share repurchase program had remaining authorized funds of $5.0 billion.

In October 2023, our board of directors authorized a new $25.0 billion share repurchase program, providing multi-year flexibility.

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.

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

During fiscal 2023, we declared and paid $3.8 billion in dividends to holders of our common and preferred stock.

On October 24, 2023, our board of directors declared a quarterly cash dividend of $0.52 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).

We expect to pay approximately $950 million in connection with this dividend on December 1, 2022.

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

We expect to continue paying quarterly dividends in cash, subject to approval by the board of directors.

We expect to pay approximately $1.1 billion in connection with this dividend on December 1, 2023.

We expect to continue paying quarterly dividends in cash, subject to

approval by the board of directors.

All preferred and class B and C common stock will share ratably on an as-converted basis in such future dividends.

Capital expenditures.

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, 2023, we had an outstanding aggregate principal amount relating to our senior notes of $20.9 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.

During fiscal 2023, we repaid $2.25 billion of principal upon maturity of our December 2022 senior notes.

Since the issuance of the $500 million green bond as part of our commitment to environmental sustainability and a sustainable payments ecosystem, we have allocated $391 million to eligible green projects.

See Note 10—Debt to our consolidated financial statements included in Item 8 of this report.

Client incentives.

As of September 30, 2023, we had short-term and long-term liabilities recorded on the consolidated balance sheet related to these agreements of $8.2 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, 2023, we had long-term liabilities for uncertain tax positions of $1.6 billion.

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

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.

See Note 19—Income Taxes to our consolidated financial statements included in Item 8 of this report.

Pending acquisition.

In June 2023, we entered into a definitive agreement to acquire Pismo for $1.0 billion in cash.

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

Purchase obligations.

1 unchanged sentence

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.

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.

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

As of September 30, 2023, we had short-term and long-term obligations of $12 million and $421 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.

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

Tax Cuts and Jobs Act.

5 unchanged sentences

We maintain and regularly review global settlement risk policies and procedures to manage settlement risk, which may require clients to post collateral if certain credit standards are not met.

See Note 1—Summary of Significant Accounting Policies and Note 12—Settlement Guarantee Management to our consolidated financial statements included in Item 8—Financial Statements and Supplementary Data of this report.

See Note 1—Summary of Significant Accounting Policies and Note 12—Settlement Guarantee Management to our consolidated financial statements included in Item 8 of this report.

Accounting Pronouncements Not Yet Adopted

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.

Subsequently, the FASB also issued an amendment to this standard.

The amendments in the ASU are effective upon issuance through December 31, 2022.

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.

The Financial Accounting Standards Board has issued certain accounting updates, which we have either determined to be not applicable or not expected to have a material impact on our consolidated financial statements.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require us to make judgments, assumptions and estimates that affect the amounts reported.

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.

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

We have established policies and control procedures which seek to ensure that estimates and assumptions are appropriately governed and applied consistently from period to period.

16 unchanged sentences

The cumulative impact of a revision in estimates is recorded in the period such revisions become probable and estimable.

For the year ended September 30, 2022, client incentives represented 26% of gross revenues.

Legal and Regulatory Matters

19 unchanged sentences

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 .

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

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 in the period in which the effect becomes probable and reasonably estimable.

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

See Note 20—Legal Matters to our consolidated financial statements included in Item 8 of this report.

Critical estimates.

6 unchanged sentences

Some or all of these judgments are subject to review by the taxing authorities.

If one or more of the taxing authorities were to successfully challenge our right to realize some or all of the tax benefit we have recorded, and we were unable to realize this benefit, it could have a material adverse effect on our financial results and cash flows.

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