What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-07-24 compared with 2024-04-24 · 96 added, 80 removed, 295 unchanged (37% of the section changed)

6 unchanged sentences

Private Securities Litigation Reform Act of 1995 that relate to, among other things, the impact on our future financial position, results of operations and cash flows;

the completion of the class B-1 exchange offer;

prospects, developments, strategies and growth of our business;

18 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

(in millions, except percentages and per share data)

12 unchanged sentences

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

Highlights for the first half of fiscal 2024.

For the three and six months ended March 31, 2024, net revenue increased 10% and 9% over the prior-year comparable periods, respectively, primarily due to the growth in nominal cross-border volume, processed transactions and nominal payments volume, partially offset by higher client incentives.

During the three and six months ended March 31, 2024, exchange rate movements did not have a material impact on net revenue growth.

Highlights for the first nine months of fiscal 2024.

For the three and nine months ended June 30, 2024, net revenue increased 10% and 9% over the prior-year comparable periods, respectively, primarily due to the growth in nominal cross-border volume, processed transactions and nominal payments volume, partially offset by higher client incentives.

During the three months ended June 30, 2024, exchange rate movements lowered our net revenue growth by approximately one percentage point.

During the nine months ended June 30, 2024, exchange rate movements did not have a material impact on net revenue growth.

See Results of Operations—Net Revenue below for further discussion.

For the three months ended March 31, 2024, GAAP operating expenses increased 29% over the prior-year comparable period, primarily driven by higher litigation provision and general and administrative expenses.

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

For the three months ended June 30, 2024, GAAP operating expenses decreased 4% over the prior-year comparable period, primarily driven by lower litigation provision.

For the nine months ended June 30, 2024, GAAP operating expenses increased 5% over the prior-year comparable period, primarily driven by higher personnel and general and administrative expenses, partially offset by lower litigation provision.

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

During the three and six months ended March 31, 2024, exchange rate movements did not have a material impact on our operating expenses growth.

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

During the three and nine months ended June 30, 2024, exchange rate movements did not have a material impact on our operating expenses growth.

For the three and nine months ended June 30, 2024, non-GAAP operating expenses increased 14% and 11% over the prior-year comparable periods, respectively, primarily driven by higher general and administrative, personnel and marketing expenses.

Class B-1 common stock exchange offer .

In May 2024, we accepted 241 million shares of class B-1 common stock tendered in the exchange offer.

In exchange, we issued approximately 120 million shares of class B-2 common stock and 48 million shares of class C common stock.

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

On January 16, 2024, we acquired Pismo Holdings (Pismo), a global cloud-native issuer processing and core banking platform, for a purchase consideration of $929 million.

1 unchanged sentence

Interchange multidistrict litigation.

During the six months ended March 31, 2024, we recorded an additional accrual pursuant to the agreement to resolve the Injunctive Relief Class claims in the interchange multidistrict litigation.

During the nine months ended June 30, 2024, we recorded additional accruals of $140 million to address claims associated with the interchange multidistrict litigation.

See Note 13—Legal Matters to our unaudited consolidated financial statements.

Common stock repurchases.

During the six months ended March 31, 2024, we repurchased 25 million shares of our class A common stock in the open market for $6.4 billion.

As of March 31, 2024, our share repurchase program had remaining authorized funds of $23.6 billion.

During the nine months ended June 30, 2024, we repurchased 42 million shares of our class A common stock in the open market for $11.2 billion.

As of June 30, 2024, our share repurchase program had remaining authorized funds of $18.9 billion.

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

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Litigation provision associated with these matters can vary significantly based on the facts and circumstances related to each matter and do not correlate to the underlying performance of our business.

During the three and six months ended March 31, 2024, and six months ended March 31, 2023, we have excluded these amounts to facilitate a comparison to our past operating performance.

During the three and nine months ended June 30, 2024 and 2023, we have excluded these amounts to facilitate a comparison to our past operating performance.

Under the U.S.

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

covered litigation through a downward adjustment to the rate at which shares of our class B-1 common stock ultimately convert into shares of class A common stock.

During the three and six months ended March 31, 2024, there was no conversion rate adjustment.

During the six months ended March 31, 2023, basic and diluted earnings per class A common stock increased $0.01 and was unchanged, respectively, as a result of the downward adjustments of the class B-1 common stock conversion rate during the period.

covered litigation through a downward adjustment to the rate at which shares of our class B-1 and class B-2 common stock ultimately convert into shares of class A common stock.

During the three and nine months ended June 30, 2024, there were no conversion rate adjustments.

During the three months ended June 30, 2023, basic and diluted earnings per class A common stock was unchanged and during the nine months ended June 30, 2023, basic and diluted earnings per class A common stock increased $0.01 and was unchanged, respectively, as a result of the downward adjustments of the class B-1 common stock conversion rate during the period.

See Note 5—U.S.

1 unchanged sentence

• Lease consolidation costs.

During the three and six months ended March 31, 2024, we recorded a charge within general and administrative expense associated with the consolidation of certain leased office spaces.

During the nine months ended June 30, 2024, we recorded a charge within general and administrative expense associated with the consolidation of certain leased office spaces.

We have excluded these amounts as they do not reflect the underlying performance of our business.

• Indirect taxes.

During the three and nine months ended June 30, 2024, as a result of the resolution of an audit, we recognized a benefit within general and administrative expense related to the release of the

reserve previously recognized in fiscal 2021.

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

• Charitable contribution.

During the three and nine months ended June 30, 2024, we donated investment securities to the Visa Foundation and recognized a non-cash general and administrative expense.

We have excluded this amount as it does not reflect the underlying performance of our business.

Non-GAAP operating expenses, non-operating income (expense), income tax provision, effective income tax rate, net income and diluted earnings per share should not be relied upon as substitutes for, or considered in isolation from, measures calculated in accordance with U.S.

2 unchanged sentences

Three Months Ended

March 31, 2024

June 30, 2024

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

7 unchanged sentences

Litigation provision (10) — 2 8 —

Lease consolidation costs

Indirect taxes

118 — (29) (89) (0.04)

Charitable contribution

(67) — 26 41 0.02

Non-GAAP $ 2,927 $ 73 $ 1,137 18.8 % $ 4,909 $ 2.42

Six Months Ended

March 31, 2024

Nine Months Ended

June 30, 2024

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

9 unchanged sentences

(57) — 13 44 0.02

Indirect taxes

118 — (29) (89) (0.04)

Charitable contribution

(67) — 26 41 0.02

Non-GAAP $ 8,417 $ 346 $ 3,274 17.9 % $ 14,964 $ 7.34

Three Months Ended

March 31, 2023

June 30, 2023

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

6 unchanged sentences

Acquisition-related costs (24) — 1 23 0.01

Litigation provision

(456) — 101 355 0.17

Non-GAAP $ 2,578 $ 37 $ 1,083 19.4 % $ 4,499 $ 2.16

Six Months Ended

March 31, 2023

Nine Months Ended

June 30, 2023

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

20 unchanged sentences

International Visa

Three Months Ended December 31, (1)

Three Months Ended March 31, (1)

(in billions, except percentages)

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International Visa

Six Months Ended December 31, (1)

2023 2022 % Change (2)

Nine Months Ended March 31, (1),(2)

(in billions, except percentages)

14 unchanged sentences

International Visa

Ended December 31,

Ended March 31,

Nominal Constant (7)

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

Therefore, service revenue reported for the three and six months ended March 31, 2024 and 2023, respectively, was based on nominal payments volume reported by our financial institution clients for the three and six months ended December 31, 2023 and 2022, respectively.

Therefore, service revenue reported for the three and nine months ended June 30, 2024 and 2023, respectively, was based on nominal payments volume reported by our financial institution clients for the three and nine months ended March 31, 2024 and 2023, respectively.

On occasion, previously presented volume information may be updated.

10 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

(in millions, except percentages)

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Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

(in millions, except percentages)

4 unchanged sentences

Percentage changes are calculated based on unrounded numbers.

Net revenue increased over the three and six-month prior-year comparable periods primarily due to the growth in nominal cross-border volume, processed transactions and nominal payments volume, partially offset by higher client incentives.

Net revenue increased over the three and nine-month prior-year comparable periods primarily due to the growth in nominal cross-border volume, processed transactions and nominal payments volume, partially offset by higher client incentives.

Our net revenue is impacted by the overall strengthening or weakening of the U.S.

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

During the three and six months ended March 31, 2024, exchange rate movements did not have a material impact on net revenue growth.

During the three months ended June 30, 2024, exchange rate movements lowered our net revenue growth by approximately one percentage point.

During the nine months ended June 30, 2024, exchange rate movements did not have a material impact on net revenue growth.

The following table presents the components of our net revenue:

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

(in millions, except percentages)

11 unchanged sentences

Percentage changes are calculated based on unrounded numbers.

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

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

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

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

• Client incentives increased primarily due to growth in payments volume over the three and six-month prior-year comparable periods.

• Service revenue increased primarily due to 7% and 8% growth in nominal payments volume over the three and nine-month prior-year comparable periods, respectively.

• Data processing revenue increased primarily due to 10% growth in processed transactions over the three and nine-month prior-year comparable periods.

• International transaction revenue increased primarily due to growth in nominal cross-border volumes of 12% and 15% over the three and nine-month prior-year comparable periods, respectively, excluding transactions within Europe, partially offset by lower volatility of a broad range of currencies.

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

• Client incentives increased primarily due to growth in payments volume over the three and nine-month prior-year comparable periods.

The amount of client incentives we record in future periods will vary based on changes in performance expectations, actual client performance, amendments to existing contracts or the execution of new contracts.

2 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

(in millions, except percentages)

7 unchanged sentences

382 314 22 % 1,174 918 28 %

Litigation provision 430 — NM 439 341 29 %

Litigation provision 13 457 (97 %) 452 798 (43 %)

Total operating expenses $ 2,962 $ 3,099 (4 %) $ 9,063 $ 8,594 5 %

NM - Not meaningful

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

Percentage changes are calculated based on unrounded numbers.

• Personnel expenses increased during the three and six months ended March 31, 2024 primarily due to a higher number of employees and compensation, reflecting our strategy to invest in future growth.

• Marketing expenses increased during the three months ended March 31, 2024 primarily due to higher spending in various campaigns.

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

• Professional fees increased during the three and six months ended March 31, 2024 primarily due to higher advisory and consulting fees.

The increase during the six months ended March 31, 2024 also included higher legal fees.

• General and administrative expenses increased during the three and six months ended March 31, 2024 primarily due to lease consolidation costs, higher indirect taxes and higher usage of travel related card benefits.

The increase during the three months ended March 31, 2024 also included unfavorable foreign currency fluctuations.

• Litigation provision increased during the three months ended March 31, 2024 due to the accruals related to the uncovered litigation and U.S.

covered litigation.

Litigation provision increased during the six months ended March 31, 2024 due to the accruals related to the uncovered litigation, partially offset by lower accruals related to the U.S.

• Personnel expenses increased over the three and nine-month prior-year comparable periods primarily due to a higher number of employees and compensation, reflecting our strategy to invest in future growth, including acquisitions.

• Marketing expenses increased over the three and nine-month prior-year comparable periods primarily due to higher spend including for client marketing and the Olympic and Paralympic Games Paris 2024.

The increase during the nine months ended June 30, 2024 was partially offset by spend related to the FIFA World Cup TM in the prior year and absent in the current year.

• Professional fees increased over the three and nine-month prior-year comparable periods primarily due to higher consulting fees.

The increase during the nine months ended June 30, 2024 also included higher advisory fees.

• Depreciation and amortization increased over the three and nine-month prior-year comparable periods primarily due to additional depreciation and amortization from our on-going investments and acquisitions.

• General and administrative expenses increased over the three and nine-month prior-year comparable periods primarily due to a charitable contribution to the Visa Foundation in the current year, higher usage of travel related card benefits, higher indirect taxes and higher unfavorable foreign currency fluctuations, partially offset by the release of the reserve on indirect taxes previously recognized in fiscal 2021.

The increase during the nine months ended June 30, 2024 also included lease consolidation costs in the current year.

• Litigation provision decreased over the three and nine-month prior-year comparable periods primarily due to lower accruals related to the U.S.

covered litigation.

The decrease during the nine months ended June 30, 2024 was partially offset by accruals related to uncovered litigation in the current year.

See Note 13—Legal Matters to our unaudited consolidated financial statements.

2 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

(in millions, except percentages)

4 unchanged sentences

Percentage changes are calculated based on unrounded numbers.

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

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

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

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

• Interest expense increased during the three months ended June 30, 2024 primarily due to higher losses from derivative instruments and higher interest expense related to taxes.

Interest expense increased during the nine months ended June 30, 2024 primarily due to higher losses from derivative instruments, partially offset by higher interest benefit related to taxes and lower interest expense related to lower outstanding debt.

• Investment income (expense) and other decreased during the three months ended June 30, 2024, primarily due to losses on our investments, partially offset by higher interest income on our cash and investments.

Investment income (expense) and other increased during the nine months ended June 30, 2024, primarily due to higher interest income on our cash and investments and lower losses on our investments.

Effective Income Tax Rate

1 unchanged sentence

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Effective income tax rate 19 % 19 % 18 % 18 %

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

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

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

The effective income tax rates differ primarily due to the following:

• During the nine months ended June 30, 2024, a $184 million tax benefit as a result of the conclusion of an audit;

• During the nine months ended June 30, 2023, a $142 million tax benefit due to the reassessment of an uncertain tax position as a result of new information obtained during an ongoing tax examination.

Liquidity and Capital Resources

1 unchanged sentence

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

Six Months Ended

Nine Months Ended

(in millions)

4 unchanged sentences

Operating activities.

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

Cash provided by operating activities for the nine months ended June 30, 2024 was lower than the prior-year comparable period primarily due to higher incentive payments and higher cash paid for taxes due to the timing of payments, partially offset by continued growth in our underlying business.

Investing activities.

Cash used in investing activities for the six months ended March 31, 2024 was higher than the prior-year comparable period primarily due to cash paid for acquisitions, net of cash acquired, higher purchases, net of maturities and sales, of investment securities and cash received from the settlement of net investment hedge derivative instruments in the prior year.

Cash used in investing activities for the nine months ended June 30, 2024 was higher than the prior-year comparable period primarily due to cash paid for acquisitions, net of cash acquired, the absence of cash received from the settlement of net investment hedge derivative instruments and higher purchases, net of maturities and sales, of investment securities.

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

Financing activities.

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

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

Cash used in financing activities for the nine months ended June 30, 2024 was higher than the prior-year comparable period primarily due to higher share repurchases and higher dividends paid, partially offset by the absence of the principal debt payment upon maturity of our December 2022 senior notes.

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

Sources of Liquidity

6 unchanged sentences

Common stock repurchases.

During the six months ended March 31, 2024, we repurchased shares of our class A common stock in the open market for $6.4 billion.

As of March 31, 2024, our share repurchase program had remaining authorized funds of $23.6 billion.

During the nine months ended June 30, 2024, we repurchased shares of our class A common stock in the open market for $11.2 billion.

As of June 30, 2024, our share repurchase program had remaining authorized funds of $18.9 billion.

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

During the six months ended March 31, 2024, we declared and paid $2.1 billion in dividends to holders of our common and preferred stock.

On April 23, 2024, our board declared a quarterly cash dividend of $0.52 per share of class A common stock (determined in the case of all other outstanding common and preferred stock on an as-converted basis).

During the nine months ended June 30, 2024, we declared and paid $3.2 billion in dividends to holders of our common and preferred stock.

On July 23, 2024, our board declared a quarterly cash dividend of $0.52 per share of class A common stock (determined in the case of all other outstanding common and preferred stock on an as-converted basis).

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

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In December 2023, the FASB issued ASU 2023-09, which provides improvements to income tax disclosures.

This standard requires disaggregated information related to effective tax rate reconciliation as well as information on income taxes paid.

This standard requires disaggregated information related to the effective tax rate reconciliation as well as information on income taxes paid.

This ASU is effective for our annual periods beginning October 1, 2025, and requires prospective application with the option to apply the standard retrospectively.

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-Q

Item 2. Management’s Discussion and Analysis