What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-01-31 compared with 2024-07-24 · 72 added, 144 removed, 247 unchanged (47% of the section changed)

26 unchanged sentences

Three 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 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.

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

For the three months ended December 31, 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 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.

For the three months ended December 31, 2024, GAAP operating expenses increased 22% over the prior year, primarily driven by higher personnel and general and administrative expenses.

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

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.

For the three months ended December 31, 2024, exchange rate movements negatively impacted our operating expenses by approximately one percentage point.

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

In December 2024, we acquired Featurespace Limited (Featurespace), a developer of real-time artificial intelligence payments protection technology that prevents and mitigates payments fraud and financial crime risks, for a purchase consideration of $946 million.

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

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.

For the three months ended December 31, 2024, we recorded an additional accrual of $27 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 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.

For the three months ended December 31, 2024, we repurchased 13 million shares of our class A common stock in the open market for $3.9 billion.

As of December 31, 2024, our share repurchase program had remaining authorized funds of $9.1 billion.

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

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

• Severance costs.

For the three months ended December 31, 2024, we recorded severance costs within personnel expense to realign our organizational structure and focus on areas that will drive higher long-term growth.

This broad-based optimization effort has been excluded as it is not representative of our ongoing operations.

• Lease consolidation costs.

For the three months ended December 31, 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 it does not reflect the underlying performance of our business.

• Litigation provision.

4 unchanged sentences

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

For the three months ended December 31, 2024, we have excluded this amount to facilitate a comparison to our past operating performance.

Under the U.S.

1 unchanged sentence

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.

For the three months ended December 31, 2024 and 2023, there was no conversion rate adjustment.

See Note 5—U.S.

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

• Lease consolidation costs.

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.

and Europe Retrospective Responsibility Plans to our unaudited consolidated financial statements.

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

2 unchanged sentences

Three Months Ended

June 30, 2024

December 31, 2024

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

6 unchanged sentences

Acquisition-related costs (34) — 2 32 0.02

Litigation provision (10) — 2 8 —

Indirect taxes

118 — (29) (89) (0.04)

Charitable contribution

Severance costs

(213) — 45 168 0.08

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

Nine Months Ended

June 30, 2024

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

Effective Income Tax Rate (2)

Income Diluted Earnings Per Share (2)

(in millions, except percentages and per share data)

As reported $ 9,063 $ 298 $ 3,119 17.8 % $ 14,425 $ 7.08

(Gains) losses on equity investments, net — 48 11 37 0.02

Amortization of acquired intangible assets (131) — 32 99 0.05

Acquisition-related costs (75) — 5 70 0.03

Litigation provision (434) — 97 337 0.17

Lease consolidation costs

(39) — 9 30 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

June 30, 2023

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

Effective Income Tax Rate (2)

Income Diluted Earnings Per Share (2)

(in millions, except percentages and per share data)

As reported $ 3,099 $ 122 $ 990 19.2 % $ 4,156 $ 2.00

(Gains) losses on equity investments, net — (85) (18) (67) (0.03)

Amortization of acquired intangible assets (41) — 9 32 0.02

Acquisition-related costs (24) — 1 23 0.01

Litigation provision (27) — 6 21 0.01

(456) — 101 355 0.17

Non-GAAP $ 2,917 $ 41 $ 1,171 17.7 % $ 5,463 $ 2.75

Nine Months Ended

June 30, 2023

Three Months Ended

December 31, 2023

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

6 unchanged sentences

Acquisition-related costs (21) — 1 20 0.01

Litigation provision (797) — 177 620 0.30

Non-GAAP $ 2,619 $ 84 $ 1,161 19.0 % $ 4,938 $ 2.41

11 unchanged sentences

International Visa

Three Months Ended March 31, (1)

Three Months Ended

September 30, (1)

Three Months Ended

September 30, (1)

Three Months Ended

September 30, (1)

(in billions, except percentages)

12 unchanged sentences

$ 1,799 $ 1,725 4 % $ 2,235 $ 2,109 6 % $ 4,034 $ 3,834 5 %

International Visa

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

(in billions, except percentages)

Nominal payments volume

Consumer credit $ 1,745 $ 1,650 6 % $ 2,217 $ 2,078 7 % $ 3,962 $ 3,728 6 %

Consumer debit (3)

2,218 2,091 6 % 2,249 1,961 15 % 4,467 4,052 10 %

Commercial (4)

771 731 6 % 457 405 13 % 1,228 1,136 8 %

Total nominal payments volume

$ 4,734 $ 4,472 6 % $ 4,923 $ 4,443 11 % $ 9,656 $ 8,915 8 %

Cash volume (5)

453 455 (1 %) 1,419 1,365 4 % 1,871 1,820 3 %

Total nominal volume (6)

$ 5,187 $ 4,927 5 % $ 6,341 $ 5,809 9 % $ 11,528 $ 10,736 7 %

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

International Visa

Ended March 31,

Nominal Constant (7)

Three Months Ended

September 30,

Three Months Ended

September 30,

Nominal Constant (7)

11 unchanged sentences

(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 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.

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

On occasion, previously presented volume information may be updated.

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Three Months Ended

June 30, Nine Months Ended

(in millions, except percentages)

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Three 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 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.

Net revenue increased over the three-month prior-year comparable period primarily due to the growth in processed transactions, nominal cross-border volume 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 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.

For the three months ended December 31, 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

June 30, Nine Months Ended

(in millions, except percentages)

6 unchanged sentences

Other revenue

780 597 31 % 2,228 1,735 28 %

Client incentives (3,797) (3,348) 13 %

2 unchanged sentences

Percentage changes are calculated based on unrounded numbers.

• 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.

• Service revenue increased over the three-month prior-year comparable period primarily due to 6% growth in nominal payments volume.

• Data processing revenue increased over the three-month prior-year comparable period primarily due to 11% growth in processed transactions.

• International transaction revenue increased over the three-month prior-year comparable period primarily due to growth in nominal cross-border volumes of 15%, excluding transactions within Europe.

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

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

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

For the three months ended December 31, 2024 and 2023, revenue from value-added services was $2.4 billion and $2.1 billion, respectively.

Value-added services revenue increased 17% primarily due to growth in consulting and marketing services, issuing solutions and risk and identity solutions.

Operating Expenses

1 unchanged sentence

Three Months Ended

June 30, Nine Months Ended

(in millions, except percentages)

4 unchanged sentences

Depreciation and amortization

264 235 12 % 760 696 9 %

General and administrative

382 314 22 % 1,174 918 28 %

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

Litigation provision 44 9 NM

Total operating expenses $ 3,276 $ 2,680 22 %

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 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.

• Personnel expenses increased over the three-month prior-year comparable period primarily due to severance costs in the current period to realign our organizational structure and a higher number of employees and compensation focused on areas that will drive higher long-term growth, including acquisitions.

• Network and processing expenses increased over the three-month prior-year comparable period primarily due to continued technology and processing network investments to support growth.

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

• General and administrative expenses increased over the three-month prior-year comparable period primarily due to unfavorable foreign currency fluctuations, lease consolidation costs in the current period and higher usage of travel related card benefits.

• Litigation provision increased over the three-month prior-year comparable period primarily due to the accrual related to the U.S.

covered litigation in the current period.

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

2 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

(in millions, except percentages)

4 unchanged sentences

Percentage changes are calculated based on unrounded numbers.

• 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.

• Investment income (expense) and other decreased over the three-month prior-year comparable period primarily due to losses on our equity investments and lower interest income on our cash and investments.

Effective Income Tax Rate

1 unchanged sentence

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Effective income tax rate 17 % 19 %

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.

The effective income tax rate decreased over the three-month prior-year comparable period due to various items including a change in the geographic mix of earnings.

The Organization for Economic Cooperation and Development (OECD) published administrative guidance around the implementation of a 15% global minimum tax (Pillar Two).

Various OECD member countries have either enacted or are in the process of enacting Pillar Two legislation.

While we do not expect a material tax impact in fiscal 2025, we are monitoring developments and evaluating the potential impact of Pillar Two on future years.

Liquidity and Capital Resources

1 unchanged sentence

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

Nine Months Ended

Three Months Ended

(in millions)

4 unchanged sentences

Operating activities.

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.

Cash provided by operating activities increased over the three-month prior-year comparable period primarily due to growth in our underlying business and the timing of payments related to income taxes.

Investing activities.

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 .

Cash provided by investing activities increased over the three-month prior-year comparable period primarily due to the absence of investment security purchases and higher proceeds from investment security sales and maturities, partially offset by cash paid for an acquisition in the current period.

Financing activities.

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 .

Cash used in financing activities increased over the three-month prior-year comparable period primarily due to lower funds held on behalf of clients, higher share repurchases and higher dividends paid.

Sources of Liquidity

6 unchanged sentences

Common stock repurchases.

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.

For the three months ended December 31, 2024, we repurchased shares of our class A common stock in the open market for $3.9 billion.

As of December 31, 2024, our share repurchase program had remaining authorized funds of $9.1 billion.

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

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).

For the three months ended December 31, 2024, we declared and paid $1.2 billion in dividends to holders of our common and preferred stock.

On January 28, 2025, our board of directors declared a quarterly cash dividend of $0.59 per share of class A common stock (determined in the case of all other outstanding common and preferred stock on an as-converted basis).

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

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

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

Senior notes.

A principal payment on our senior notes of $4.0 billion is due in December 2025 for which we have sufficient liquidity.

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

Acquisition .

On January 16, 2024, we acquired Pismo for a purchase consideration of $929 million.

In December 2024, we acquired Featurespace for a purchase consideration of $946 million.

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

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We are currently evaluating the impact of the ASU on our disclosures.

In November 2024, the FASB issued ASU 2024-03, which requires disclosure of additional information about specific expense categories underlying certain income statement expense line items.

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

The amendments in the ASU are effective for our annual periods beginning October 1, 2027, and interim periods beginning October 1, 2028, and require either prospective or retrospective application.

We are currently evaluating the impact of the ASU on our disclosures.

Quantitative and Qualitative Disclosures about Market Risk

1 unchanged sentence

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis