VISA INC. 10-Q

ITEM 1. Financial Statements (Unaudited) VISA CONSOLIDATED BALANCE SHEETS (UNAUDITED) December 31, 2024 September 30, 2024 (in millions, except per share data) Assets Cash and cash equivalents $ 12,367 $ 11,975 Restricted cash equivalents—U.S. litigation escrow 3,112 3,089 Investment securities 1,967 3,200 Settlement receivable 3,683 4,454 Accounts receivable 2,590 2,561 Customer collateral 3,518 3,524 Current portion of client incentives 1,992 1,918 Prepaid expenses and other current assets 3,393 3,312 Total current assets 32,622 34,033 Investment securities 1,757 2,545 Client incentives 4,631 4,628 Property, equipment and technology, net 3,974 3,824 Goodwill 19,548 18,941 Intangible assets, net 25,889 26,889 Other assets 3,467 3,651 Total assets $ 91,888 $ 94,511 Liabilities Accounts payable $ 405 $ 479 Settlement payable 4,425 5,265 Customer collateral 3,518 3,524 Accrued compensation and benefits 1,226 1,538 Client incentives 9,249 9,075 Accrued liabilities 4,690 4,909 Current maturities of debt 3,929 — Accrued litigation 1,649 1,727 Total current liabilities 29,091 26,517 Long-term debt 16,680 20,836 Deferred tax liabilities 5,192 5,301 Other liabilities 2,629 2,720 Total liabilities 53,592 55,374 Commitments and contingencies (Note 13) Equity Preferred stock, $ 0.0001 par value, 5 shares issued and outstanding as of December 31, 2024 and September 30, 2024 904 1,031 Common stock, $ 0.0001 par value: Class A common stock, 1,726 and 1,733 shares issued and outstanding as of December 31, 2024 and September 30, 2024, respectively — — Class B-1 and B-2 total common stock, 125 shares issued and outstanding as of December 31, 2024 and September 30, 2024 — — Class C common stock, 9 and 10 shares issued and outstanding as of December 31, 2024 and September 30, 2024, respectively — — Right to recover for covered losses ( 123 ) ( 104 ) Additional paid-in capital 21,324 21,229 Accumulated income 17,438 17,289 Accumulated other comprehensive income (loss): Investment securities 12 30 Defined benefit pension and other postretirement plans ( 15 ) ( 16 ) Derivative instruments ( 105 ) ( 213 ) Foreign currency translation adjustments ( 1,139 ) ( 109 ) Total accumulated other comprehensive income (loss) ( 1,247 ) ( 308 ) Total equity 38,296 39,137 Total liabilities and equity $ 91,888 $ 94,511 See accompanying notes, which are an integral part of these unaudited consolidated financial statements. 3 Table of Contents VISA CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED ) Three Months Ended December 31, 2024 2023 (in millions, except per share data) Net revenue $ 9,510 $ 8,634 Operating Expenses Personnel 1,813 1,479 Marketing 306 293 Network and processing 207 181 Professional fees 143 131 Depreciation and amortization 282 247 General and administrative 481 340 Litigation provision 44 9 Total operating expenses 3,276 2,680 Operating income 6,234 5,954 Non-operating Income (Expense) Interest expense ( 182 ) ( 187 ) Investment income (expense) and other 148 275 Total non-operating income (expense) ( 34 ) 88 Income before income taxes 6,200 6,042 Income tax provision 1,081 1,152 Net income $ 5,119 $ 4,890 Basic Earnings Per Share Class A common stock $ 2.58 $ 2.39 Class B-1 common stock $ 4.04 $ 3.80 Class B-2 common stock (1) $ 3.99 $ — Class C common stock $ 10.33 $ 9.58 Basic Weighted-average Shares Outstanding Class A common stock 1,729 1,584 Class B-1 common stock 5 245 Class B-2 common stock (1) 120 — Class C common stock 10 9 Diluted Earnings Per Share Class A common stock $ 2.58 $ 2.39 Class B-1 common stock $ 4.04 $ 3.80 Class B-2 common stock (1) $ 3.98 $ — Class C common stock $ 10.32 $ 9.57 Diluted Weighted-average Shares Outstanding Class A common stock 1,985 2,045 Class B-1 common stock 5 245 Class B-2 common stock (1) 120 — Class C common stock 10 9 (1) No shares of class B-2 common stock were outstanding prior to the class B-1 common stock exchange offer in May 2024. See Note 9—Stockholders’ Equity for further details. See accompanying notes, which are an integral part of these unaudited consolidated financial statements. 4 Table of Contents VISA CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) Three Months Ended December 31, 2024 2023 (in millions) Net income $ 5,119 $ 4,890 Other comprehensive income (loss): Investment securities: Net unrealized gain (loss) ( 24 ) 58 Income tax effect 6 ( 12 ) Defined benefit pension and other postretirement plans: Reclassification adjustments 1 3 Income tax effect — ( 1 ) Derivative instruments: Net unrealized gain (loss) 168 ( 77 ) Income tax effect ( 25 ) 16 Reclassification adjustments ( 42 ) 39 Income tax effect 7 ( 9 ) Foreign currency translation adjustments: Translation adjustments ( 935 ) 588 Income tax effect ( 95 ) 57 Other comprehensive income (loss) ( 939 ) 662 Comprehensive income $ 4,180 $ 5,552 See accompanying notes, which are an integral part of these unaudited consolidated financial statements. 5 Table of Contents VISA CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) Three Months Ended December 31, 2024 Preferred Stock Common Stock and Additional Paid-in Capital Right to Recover for Covered Losses Accumulated Income Accumulated Other Comprehensive Income (Loss) Total Equity Shares Amount Shares Amount (in millions, except per share data) Balance as of September 30, 2024 5 $ 1,031 (1) 1,868 $ 21,229 $ ( 104 ) $ 17,289 $ ( 308 ) $ 39,137 Net income 5,119 5,119 Other comprehensive income (loss) ( 939 ) ( 939 ) VE territory covered losses incurred ( 27 ) ( 27 ) Recovery through conversion rate adjustment ( 8 ) 8 — Conversions to class A common stock — (2) ( 119 ) 3 119 — Share-based compensation 224 224 Stock issued under equity plans 3 127 127 Shares withheld for taxes related to stock issued under equity plans ( 1 ) ( 235 ) ( 235 ) Cash dividends declared and paid, at a quarterly amount of $ 0.59 per class A common stock ( 1,170 ) ( 1,170 ) Repurchases of class A common stock ( 13 ) ( 140 ) ( 3,800 ) ( 3,940 ) Balance as of December 31, 2024 5 $ 904 (1) 1,860 $ 21,324 $ ( 123 ) $ 17,438 $ ( 1,247 ) $ 38,296 (1) As of December 31, 2024 and September 30, 2024, the book value of series A convertible participating preferred stock (series A preferred stock) was $ 421 million and $ 540 million, respectively. See Note 5—U.S. and Europe Retrospective Responsibility Plans for the book value of series B convertible participating preferred stock (series B preferred stock) and series C convertible participating preferred stock (series C preferred stock). (2) Increase or decrease is less than one million. See accompanying notes, which are an integral part of these unaudited consolidated financial statements. 6 Table of Contents VISA CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued) (UNAUDITED) Three Months Ended December 31, 2023 Preferred Stock Common Stock and Additional Paid-in Capital Right to Recover for Covered Losses Accumulated Income Accumulated Other Comprehensive Income (Loss) Total Equity Shares Amount Shares Amount (in millions, except per share data) Balance as of September 30, 2023 5 $ 1,698 (1) 1,849 $ 20,452 $ ( 140 ) $ 18,040 $ ( 1,317 ) $ 38,733 Net income 4,890 4,890 Other comprehensive income (loss) 662 662 VE territory covered losses incurred ( 24 ) ( 24 ) Recovery through conversion rate adjustment ( 25 ) 25 — Conversions to class A common stock — (2) ( 58 ) 1 58 — Share-based compensation 209 209 Stock issued under equity plans 2 104 104 Shares withheld for taxes related to stock issued under equity plans ( 1 ) ( 172 ) ( 172 ) Cash dividends declared and paid, at a quarterly amount of $ 0.52 per class A common stock ( 1,060 ) ( 1,060 ) Repurchases of class A common stock ( 15 ) ( 161 ) ( 3,448 ) ( 3,609 ) Balance as of December 31, 2023 5 $ 1,615 (1) 1,836 $ 20,490 $ ( 139 ) $ 18,422 $ ( 655 ) $ 39,733 (1) As of December 31, 2023 and September 30, 2023, the book value of series A preferred stock was $ 398 million and $ 456 million, respectively. See Note 5—U.S. and Europe Retrospective Responsibility Plans for the book value of series B and series C preferred stock. (2) Increase or decrease is less than one million. See accompanying notes, which are an integral part of these unaudited consolidated financial statements. 7 Table of Contents VISA CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended December 31, 2024 2023 (in millions) Operating Activities Net income $ 5,119 $ 4,890 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Client incentives 3,797 3,348 Share-based compensation 224 209 Depreciation and amortization 282 247 Deferred income taxes 38 59 VE territory covered losses incurred ( 27 ) ( 24 ) (Gains) losses on equity investments, net 75 ( 4 ) Other 56 11 Change in operating assets and liabilities: Settlement receivable 657 ( 257 ) Accounts receivable ( 64 ) ( 195 ) Client incentives ( 3,649 ) ( 3,601 ) Other assets ( 10 ) ( 204 ) Accounts payable ( 54 ) ( 18 ) Settlement payable ( 673 ) 313 Accrued and other liabilities ( 303 ) ( 877 ) Accrued litigation ( 72 ) ( 283 ) Net cash provided by (used in) operating activities 5,396 3,614 Investing Activities Purchases of property, equipment and technology ( 345 ) ( 267 ) Purchases of investment securities — ( 2,743 ) Proceeds from maturities and sales of investment securities 2,042 1,137 Acquisitions, net of cash and restricted cash acquired ( 906 ) — Purchases of other investments ( 6 ) ( 11 ) Other investing activities 5 ( 5 ) Net cash provided by (used in) investing activities 790 ( 1,889 ) Financing Activities Repurchases of class A common stock ( 4,011 ) ( 3,580 ) Dividends paid ( 1,170 ) ( 1,060 ) Proceeds from stock issued under equity plans 127 104 Taxes paid related to stock issued under equity plans ( 235 ) ( 172 ) Other financing activities ( 186 ) 329 Net cash provided by (used in) financing activities ( 5,475 ) ( 4,379 ) Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents ( 508 ) 300 Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents 203 ( 2,354 ) Cash, cash equivalents, restricted cash and restricted cash equivalents as of beginning of period 19,763 21,990 Cash, cash equivalents, restricted cash and restricted cash equivalents as of end of period $ 19,966 $ 19,636 Supplemental Disclosure Cash paid for income taxes, net (1) $ 1,194 $ 1,503 Interest payments on debt $ 213 $ 213 Accruals related to purchases of property, equipment and technology $ 40 $ 26 (1) For the three months ended December 31, 2024, the amount includes $ 1.1 billion of cash paid for federal transferable tax credits. See accompanying notes, which are an integral part of these unaudited consolidated financial statements. 8 Table of Contents VISA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1—Summary of Significant Accounting Policies Organization. Visa Inc., together with its subsidiaries (Visa or the Company), is a global payments technology company that facilitates global commerce and money movement across more than 200 countries and territories. Visa operates one of the world’s largest electronic payments networks — VisaNet — which provides transaction processing services, primarily authorization, clearing and settlement. The Company offers products, solutions and services that facilitate secure, reliable and efficient money movement for participants in the ecosystem. Visa is not a financial institution and does not issue cards, extend credit or set rates and fees for account holders of Visa products. In most cases, account holder and merchant relationships belong to, and are managed by, Visa’s financial institution clients. Consolidation and basis of presentation. The accompanying unaudited consolidated financial statements include the accounts of Visa and its consolidated entities and are presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The Company consolidates entities for which it has a controlling financial interest, including variable interest entities (VIEs) for which the Company is the primary beneficiary. The Company’s investments in VIEs have not been material to its unaudited consolidated financial statements as of and for the periods presented. Intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited consolidated financial statements are presented in accordance with the U.S. Securities and Exchange Commission (SEC) requirements for Quarterly Reports on Form 10-Q and, consequently, do not include all of the annual disclosures required by U.S. GAAP. Reference should be made to Visa’s Annual Report on Form 10-K for the year ended September 30, 2024 for additional disclosures, including a summary of the Company’s significant accounting policies. In the opinion of management, the accompanying unaudited consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods presented. The results of operations for interim periods are not necessarily indicative of results for the full year. Use of estimates. The preparation of the accompanying unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and reported amounts of revenue and expenses during the reporting period. These estimates may change as new events occur and additional information is obtained, and will be recognized in the period in which such changes occur. Future actual results could differ materially from these estimates. Note 2—Acquisitions In December 2024, Visa acquired Featurespace Limited, 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. Due to the limited amount of time since the acquisition date, the initial allocation of the purchase price has not yet been completed. On a provisional basis, the Company allocated $ 143 million of the purchase consideration to technology, customer relationships and deferred tax liabilities and the remaining $ 803 million to goodwill. The Company expects to finalize the purchase price allocation once the information required to complete the accounting is available, but no later than one year from the acquisition date. 9 Table of Contents Note 3—Revenue The nature, amount, timing and uncertainty of the Company’s revenue and cash flows and how they are affected by economic factors are most appropriately depicted through the Company’s revenue categories and geographical markets. The following tables disaggregate the Company’s net revenue by revenue category and by geography: Three Months Ended December 31, 2024 2023 (in millions) Service revenue $ 4,208 $ 3,915 Data processing revenue 4,745 4,356 International transaction revenue 3,442 3,019 Other revenue 912 692 Client incentives ( 3,797 ) ( 3,348 ) Net revenue $ 9,510 $ 8,634 Three Months Ended December 31, 2024 2023 (in millions) U.S. $ 3,738 $ 3,645 International 5,772 4,989 Net revenue $ 9,510 $ 8,634 For the three months ended December 31, 2024 and 2023, revenue from value-added services was $ 2.4 billion and $ 2.1 billion, respectively. Revenue from value-added services is recognized within data processing, other and service revenue. Remaining performance obligations are comprised of deferred revenue and contract revenue that will be invoiced and recognized as revenue in future periods primarily related to value-added services. As of December 31, 2024, the remaining performance obligations were $ 4.3 billion. The Company expects approximately half to be recognized as revenue in the next two years and the remaining thereafter. However, the amount and timing of revenue recognition is affected by several factors, including contract modifications and terminations, which could impact the estimate of amounts allocated to remaining performance obligations and when such revenue could be recognized. Note 4—Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents The Company reconciles cash, cash equivalents, restricted cash and restricted cash equivalents reported on the consolidated balance sheets that aggregate to the beginning and ending balances shown in the consolidated statements of cash flows as follows: December 31, 2024 September 30, 2024 (in millions) Cash and cash equivalents $ 12,367 $ 11,975 Restricted cash and restricted cash equivalents: U.S. litigation escrow 3,112 3,089 Customer collateral 3,518 3,524 Prepaid expenses and other current assets 969 1,175 Cash, cash equivalents, restricted cash and restricted cash equivalents $ 19,966 $ 19,763 10 Table of Contents Note 5—U.S. and Europe Retrospective Responsibility Plans U.S. Retrospective Responsibility Plan Under the terms of the U.S. retrospective responsibility plan, the Company maintains an escrow account from which settlements of, or judgments in, certain litigation (U.S. covered litigation) are paid. The accrual related to the U.S. covered litigation could be either higher or lower than the U.S. litigation escrow account balance. See Note 13—Legal Matters . The following table presents the changes in the U.S. litigation escrow account: Three Months Ended December 31, 2024 2023 (in millions) Balance as of beginning of period $ 3,089 $ 1,764 Payments to opt-out merchants (1) , net of interest earned on escrow funds 23 ( 148 ) Balance as of end of period $ 3,112 $ 1,616 (1) These payments are associated with the interchange multidistrict litigation. See Note 13—Legal Matters . Europe Retrospective Responsibility Plan Visa Inc., Visa International and Visa Europe are parties to certain existing and potential litigation relating to the setting of multilateral interchange fee rates in the Visa Europe territory (VE territory covered litigation). Under the terms of the Europe retrospective responsibility plan, the Company is entitled to recover certain losses resulting from VE territory covered litigation (VE territory covered losses) through a periodic adjustment to the class A common stock conversion rates applicable to the series B and C preferred stock. VE territory covered losses are recorded in right to recover for covered losses, a contra-equity account within stockholders’ equity, before the corresponding adjustment to the applicable conversion rate is effected. Adjustments to the conversion rate may be executed once in any six-month period unless a single, individual loss greater than € 20 million is incurred, in which case, the six-month limitation does not apply. When the adjustment to the conversion rate is made, the amount previously recorded in right to recover for covered losses is then recorded against the book value of the preferred stock within stockholders’ equity. The following table presents the activities related to VE territory covered losses in the preferred stock and right to recover for covered losses within stockholders’ equity: Three Months Ended December 31, 2024 Preferred Stock Right to Recover for Covered Losses Series B Series C (in millions) Balance as of beginning of period $ 104 $ 387 $ ( 104 ) VE territory covered losses incurred (1) — — ( 27 ) Recovery through conversion rate adjustment ( 5 ) ( 3 ) 8 Balance as of end of period $ 99 $ 384 $ ( 123 ) 11 Table of Contents Three Months Ended December 31, 2023 Preferred Stock Right to Recover for Covered Losses Series B Series C (in millions) Balance as of beginning of period $ 441 $ 801 $ ( 140 ) VE territory covered losses incurred (1) — — ( 24 ) Recovery through conversion rate adjustment ( 22 ) ( 3 ) 25 Balance as of end of period $ 419 $ 798 $ ( 139 ) (1) VE territory covered losses incurred reflect litigation provision for settlements with merchants and additional legal costs. See Note 13—Legal Matters . The following table presents the as-converted value of the preferred stock available to recover VE territory covered losses compared to the book value of preferred stock recorded within the Company’s consolidated balance sheets: December 31, 2024 September 30, 2024 As-converted Value of Preferred Stock (1),(2) Book Value of Preferred Stock (1) As-converted Value of Preferred Stock (1),(3) Book Value of Preferred Stock (1) (in millions) Series B preferred stock $ 781 $ 99 $ 684 $ 104 Series C preferred stock 1,779 384 1,550 387 Total 2,560 483 2,234 491 Less: right to recover for covered losses ( 123 ) ( 123 ) ( 104 ) ( 104 ) Total recovery for covered losses available $ 2,437 $ 360 $ 2,130 $ 387 (1) Figures in the table may not recalculate exactly due to rounding. As-converted and book values are based on unrounded numbers. (2) As of December 31, 2024, the as-converted value of preferred stock is calculated as the product of: (a) 2 million and 3 million shares of the series B and C preferred stock outstanding, respectively; (b) 0.9960 and 1.7830 , the class A common stock conversion rate applicable to the series B and C preferred stock outstanding, respectively; and (c) $ 316.04 , Visa’s class A common stock closing stock price. (3) As of September 30, 2024, the as-converted value of preferred stock is calculated as the product of: (a) 2 million and 3 million shares of the series B and C preferred stock outstanding, respectively; (b) 1.0030 and 1.7860 , the class A common stock conversion rate applicable to the series B and C preferred stock outstanding, respectively; and (c) $ 274.95 , Visa’s class A common stock closing stock price. 12 Table of Contents Note 6—Fair Value Measurements and Investments Assets and Liabilities Measured at Fair Value on a Recurring Basis Fair Value Measurements Using Inputs Considered as Level 1 Level 2 December 31, 2024 September 30, 2024 December 31, 2024 September 30, 2024 (in millions) Assets Cash equivalents and restricted cash equivalents: Money market funds $ 10,623 $ 10,403 $ — $ — U.S. Treasury securities 7 7 — — Investment securities: Marketable equity securities 334 301 — — U.S. government-sponsored debt securities — — 304 496 U.S. Treasury securities 3,086 4,948 — — Other current and non-current assets: Money market funds 25 25 — — Derivative instruments — — 448 103 Total $ 14,075 $ 15,684 $ 752 $ 599 Liabilities Accrued compensation and benefits: Deferred compensation liability $ 261 $ 238 $ — $ — Accrued and other liabilities: Derivative instruments — — 272 226 Total $ 261 $ 238 $ 272 $ 226 Level 1 assets and liabilities. Money market funds, U.S. Treasury securities and marketable equity securities are classified as Level 1 within the fair value hierarchy, as fair value is based on unadjusted quoted prices in active markets for identical assets. The Company’s deferred compensation liability is measured at fair value based on marketable equity securities held under the deferred compensation plan. Level 2 assets and liabilities. The fair value of U.S. government-sponsored debt securities, as provided by third-party pricing vendors, is based on quoted prices in active markets for similar, not identical, assets. Derivative instruments are valued using inputs that are observable in the market or can be derived principally from or corroborated by observable market data. U.S. Government-sponsored Debt Securities and U.S. Treasury Securities The amortized cost, unrealized gains and losses and fair value of debt securities were as follows: December 31, 2024 Amortized Cost Gross Unrealized Fair Value Gains Losses (in millions) U.S. government-sponsored debt securities $ 303 $ 1 $ — $ 304 U.S. Treasury securities 3,079 14 — 3,093 Total $ 3,382 $ 15 $ — $ 3,397 13 Table of Contents September 30, 2024 Amortized Cost Gross Unrealized Fair Value Gains Losses (in millions) U.S. government-sponsored debt securities $ 492 $ 4 $ — $ 496 U.S. Treasury securities 4,920 40 ( 5 ) 4,955 Total $ 5,412 $ 44 $ ( 5 ) $ 5,451 The stated maturities of debt securities were as follows: December 31, 2024 (in millions) Due within one year $ 1,713 Due after one year through five years 1,684 Total $ 3,397 Equity Securities For the three months ended December 31, 2024 and 2023, the Company recognized net unrealized losses of $ 83 million and net unrealized gains of $ 36 million, respectively, on marketable and non-marketable equity securities held as of period end. Fair value measurement alternative. The Company’s investments in privately held companies do not have readily determinable fair values. These investments are measured at fair value on a non-recurring basis and are classified as Level 3 due to the absence of quoted market prices, the inherent lack of liquidity and the fact that significant inputs used to measure fair value are unobservable and require management’s judgment. The following table summarizes the Company’s non-marketable equity securities held as of period end that were accounted for using the fair value measurement alternative: December 31, 2024 September 30, 2024 (in millions) Initial cost basis $ 711 $ 711 Adjustments: Upward adjustments 909 910 Downward adjustments, including impairment ( 552 ) ( 465 ) Carrying amount $ 1,068 $ 1,156 Unrealized gains and losses of the Company’s non-marketable equity securities held as of period end that were accounted for using the fair value measurement alternative were as follows: Three Months Ended December 31, 2024 2023 (in millions) Upward adjustments $ — $ 9 Downward adjustments, including impairment $ ( 91 ) $ — 14 Table of Contents Other Fair Value Disclosures Debt. Debt instruments are measured at amortized cost on the Company’s consolidated balance sheets. The fair value of the debt instruments, as provided by third-party pricing vendors, is based on quoted prices in active markets for similar, not identical, instruments. If measured at fair value in the financial statements, these instruments would be classified as Level 2 in the fair value hierarchy. As of December 31, 2024, the carrying value and estimated fair value of debt was $ 20.6 billion and $ 18.4 billion, respectively. As of September 30, 2024, the carrying value and estimated fair value of debt was $ 20.8 billion and $ 19.2 billion, respectively. Other financial instruments not measured at fair value. As of December 31, 2024, the carrying values of settlement receivable and payable and customer collateral are an approximate fair value due to their generally short maturities. If measured at fair value in the financial statements, these instruments would be classified as Level 2 in the fair value hierarchy. Non-financial assets. Certain non-financial assets such as goodwill, intangible assets and property, equipment and technology are subject to non-recurring fair value measurements if they are deemed to be impaired. The Company performed an annual impairment review of its indefinite-lived intangible assets and goodwill as of February 1, 2024, and concluded there was no impairment as of that date. No recent events or changes in circumstances indicated that impairment existed as of December 31, 2024 . 15 Table of Contents Note 7—Debt The Company had outstanding debt as follows: December 31, 2024 September 30, 2024 Effective Interest Rate (1) (in millions, except percentages) U.S. dollar notes 3.15 % Senior Notes due December 2025 $ 4,000 $ 4,000 3.26 % 1.90 % Senior Notes due April 2027 1,500 1,500 2.02 % 0.75 % Senior Notes due August 2027 500 500 0.84 % 2.75 % Senior Notes due September 2027 750 750 2.91 % 2.05 % Senior Notes due April 2030 1,500 1,500 2.13 % 1.10 % Senior Notes due February 2031 1,000 1,000 1.20 % 4.15 % Senior Notes due December 2035 1,500 1,500 4.23 % 2.70 % Senior Notes due April 2040 1,000 1,000 2.80 % 4.30 % Senior Notes due December 2045 3,500 3,500 4.37 % 3.65 % Senior Notes due September 2047 750 750 3.73 % 2.00 % Senior Notes due August 2050 1,750 1,750 2.09 % Euro notes 1.50 % Senior Notes due June 2026 1,412 1,513 1.71 % 2.00 % Senior Notes due June 2029 1,046 1,120 2.13 % 2.375 % Senior Notes due June 2034 680 728 2.53 % Total debt 20,888 21,111 Unamortized discounts and debt issuance costs ( 136 ) ( 142 ) Hedge accounting fair value adjustments (2) ( 143 ) ( 133 ) Total carrying value of debt $ 20,609 $ 20,836 Reported as: Current maturities of debt $ 3,929 $ — Long-term debt 16,680 20,836 Total carrying value of debt $ 20,609 $ 20,836 (1) Effective interest rates disclosed do not reflect hedge accounting adjustments. (2) Represents the fair value of interest rate swap agreements entered into on a portion of the outstanding senior notes. Note 8—Settlement Guarantee Management The Company indemnifies its clients for settlement losses suffered due to failure of any other client to fund its settlement obligations in accordance with the Visa operating rules. This indemnification creates settlement risk for the Company due to the difference in timing between the date of a payment transaction and the date of subsequent settlement. The Company maintains and regularly reviews global settlement risk policies and procedures to manage settlement risk, which may require clients to post collateral if certain credit standards are not met. Historically, the Company has experienced minimal losses as a result of its settlement risk guarantee. However, the Company’s future obligations, which could be material under its guarantees, are not determinable as they are dependent upon future events. The Company’s settlement exposure is limited to the amount of unsettled Visa payment transactions at any point in time, which vary significantly day to day. For the three months ended December 31, 2024, the Company’s maximum daily settlement exposure was $ 153.4 billion and the average daily settlement exposure was $ 89.7 billion. To mitigate the risk of settlement exposure, the Company has various forms of collateral including restricted cash, 16 Table of Contents letters of credit, guarantees, beneficial rights to trust assets and pledged securities. As of December 31, 2024, the Company had total collateral of $ 7.9 billion. Note 9—Stockholders’ Equity As-converted class A common stock. The number of shares outstanding, and the number of shares of class A common stock on an as-converted basis were as follows: December 31, 2024 September 30, 2024 Shares Outstanding Conversion Rate Into Class A Common Stock As-converted Class A Common Stock (1) Shares Outstanding Conversion Rate Into Class A Common Stock As-converted Class A Common Stock (1) (in millions, except conversion rate) Series A preferred stock — (2) 100.0000 7 — (2) 100.0000 9 Series B preferred stock 2 0.9960 2 2 1.0030 2 Series C preferred stock 3 1.7830 6 3 1.7860 6 Class A common stock 1,726 — 1,726 1,733 — 1,733 Class B-1 common stock 5 1.5653 (3) 8 5 1.5653 (3) 8 Class B-2 common stock 120 1.5430 (3) 186 120 1.5430 (3) 186 Class C common stock 9 4.0000 37 10 4.0000 39 Total 1,972 1,983 (1) Figures in the table may not recalculate exactly due to rounding. As-converted class A common stock is calculated based on unrounded numbers. (2) The number of shares outstanding was less than one million. (3) The class B-1 and class B-2 to class A common stock conversion calculations for dividend payments are based on a conversion rate rounded to the tenth decimal. Conversion rates are presented on a rounded basis. Reduction in as-converted shares. The following table presents the reduction in the number of as-converted series B and C preferred stock after the Company recovered VE territory covered losses through conversion rate adjustments under the Europe retrospective responsibility plan: Three Months Ended December 31, 2024 Three Months Ended December 31, 2023 Series B Series C Series B Series C (in millions, except per share data) Reduction in equivalent number of class A common stock — (1) — (1) — (1) — (1) Effective price per share (2) $ 312.39 $ 312.39 $ 254.32 $ 254.32 Recovery through conversion rate adjustment $ 5 $ 3 $ 22 $ 3 (1) The reduction in equivalent number of class A common stock was less than one million shares. (2) Effective price per share for each adjustment is calculated using the volume-weighted average price of the Company’s class A common stock over a pricing period in accordance with the Company’s current certificates of designations for its series B and C preferred stock. 17 Table of Contents Common stock repurchases. The following table presents share repurchases in the open market: Three Months Ended December 31, 2024 2023 (in millions, except per share data) Shares repurchased in the open market (1) 13 15 Average repurchase cost per share (2) $ 300.61 $ 238.47 Total cost (2) $ 3,940 $ 3,609 (1) Shares repurchased in the open market are retired and constitute authorized but unissued shares. (2) Figures in the table may not recalculate exactly due to rounding. Average repurchase cost per share and total cost are calculated based on unrounded numbers and include applicable taxes. As of December 31, 2024, shares repurchased in the open market include $ 70 million unsettled repurchases. In October 2023, the Company’s board of directors authorized a share repurchase program of $ 25.0 billion, providing multi-year flexibility. This authorization has no expiration date. As of December 31, 2024, the Company’s share repurchase program had remaining authorized funds of $ 9.1 billion. All share repurchase programs authorized prior to October 2023 have been completed. Dividends. For the three months ended December 31, 2024 and 2023, the Company declared and paid dividends of $ 1.2 billion and $ 1.1 billion, respectively. On January 28, 2025, the Company’s 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), payable on March 3, 2025 to all holders of record as of February 11, 2025. Class B common stock. In January 2024, Visa’s common stockholders approved amendments to the Company’s certificate of incorporation that authorized Visa to implement an exchange offer program that released transfer restrictions on portions of the Company’s class B common stock by allowing holders to exchange a portion of their outstanding shares of class B common stock for shares of freely tradeable class C common stock. The certificate of incorporation amendments automatically redenominated all shares of class B common stock outstanding at the amendment date as class B-1 common stock with no changes to the par value, conversion features, rights or privileges. All references to class B common stock outstanding prior to January 23, 2024 have been updated in this report to class B-1 common stock to reflect this redenomination. The amendments also authorized new classes of class B common stock that will only be issuable in connection with an exchange offer where a preceding class of B common stock is tendered in exchange and retired. Class B-1 common stock exchange offer . In May 2024, Visa accepted 241 million shares of class B-1 common stock tendered in the exchange offer. In exchange, Visa issued approximately 120 million shares of class B-2 common stock and 48 million shares of class C common stock. The class B-1 common shares exchanged have been retired and constitute authorized but unissued shares. Future conversion rate adjustments for the class B-2 common stock will have double the impact compared to conversion rate adjustments for the class B-1 common stock. 18 Table of Contents Note 10—Earnings Per Share The following tables present earnings per share: Three Months Ended December 31, 2024 Basic Earnings Per Share Diluted Earnings Per Share Income Allocation (A) (1) Weighted- Average Shares Outstanding (B) Earnings per Share = (A)/(B) (2) Income Allocation (A) (1) Weighted- Average Shares Outstanding (B) Earnings per Share = (A)/(B) (2) (in millions, except per share data) Class A common stock $ 4,466 1,729 $ 2.58 $ 5,119 (3) 1,985 (3) $ 2.58 Class B-1 common stock 20 5 $ 4.04 $ 20 5 $ 4.04 Class B-2 common stock (4) 480 120 $ 3.99 $ 479 120 $ 3.98 Class C common stock 98 10 $ 10.33 $ 98 10 $ 10.32 Participating securities 55 Not presented Not presented $ 55 Not presented Not presented Net income $ 5,119 Three Months Ended December 31, 2023 Basic Earnings Per Share Diluted Earnings Per Share Income Allocation (A) (1) Weighted- Average Shares Outstanding (B) Earnings per Share = (A)/(B) (2) Income Allocation (A) (1) Weighted- Average Shares Outstanding (B) Earnings per Share = (A)/(B) (2) (in millions, except per share data) Class A common stock $ 3,792 1,584 $ 2.39 $ 4,890 (3) 2,045 (3) $ 2.39 Class B-1 common stock 933 245 $ 3.80 $ 932 245 $ 3.80 Class C common stock 91 9 $ 9.58 $ 91 9 $ 9.57 Participating securities 74 Not presented Not presented $ 74 Not presented Not presented Net income $ 4,890 (1) Income allocation is based on the weighted-average number of as-converted class A common stock outstanding as shown in the table below. (2) Figures in the table may not recalculate exactly due to rounding. Basic and diluted earnings per share are calculated based on unrounded numbers. (3) Diluted class A common stock earnings per share calculation includes the assumed conversion of any class B-1, B-2 and C common stock and participating securities on an as-converted basis as shown in the table below and the incremental common stock equivalents related to employee stock plans, as calculated under the treasury stock method. The common stock equivalents were not material for the three months ended December 31, 2024 and 2023. (4) No shares of class B-2 common stock were outstanding prior to the class B-1 common stock exchange offer in May 2024. See Note 9—Stockholders’ Equity for further details. The following table presents the weighted-average number of as-converted class A common stock outstanding: Three Months Ended December 31, 2024 2023 (in millions) Class B-1 common stock 8 390 Class B-2 common stock (1) 186 — Class C common stock 38 38 Participating securities 21 31 (1) No shares of class B-2 common stock were outstanding prior to the class B-1 common stock exchange offer in May 2024. See Note 9—Stockholders’ Equity for further details. 19 Table of Contents Note 11—Share-based Compensation The following table presents the equity awards granted to employees and non-employee directors under the amended and restated 2007 Equity Incentive Compensation Plan (EIP) for the three months ended December 31, 2024: Granted Weighted-Average Grant Date Fair Value Weighted-Average Exercise Price Non-qualified stock options 643,847 $ 73.55 $ 311.85 Restricted stock units 2,376,825 $ 311.41 Performance-based shares (1) 476,480 $ 345.65 (1) Represents the maximum number of performance-based shares which could be earned. For the three months ended December 31, 2024 and 2023, the Company recorded share-based compensation cost related to the EIP of $ 215 million and $ 200 million, respectively. Note 12—Income Taxes For the three months ended December 31, 2024 and 2023, the effective income tax rates were 17 % and 19 %, respectively. The effective income tax rates differ due to various items including a change in the geographic mix of earnings. For the three months ended December 31, 2024, the Company’s gross unrecognized tax benefits increased $ 93 million, and the Company’s net unrecognized tax benefits increased $ 12 million. The change in unrecognized tax benefits is related to various tax positions across several jurisdictions, including an increase in gross timing differences. The Company’s tax filings are subject to examination by U.S. federal, state and foreign taxing authorities. The timing and outcome of the final resolutions of the various ongoing income tax examinations and refund claims are uncertain. It is not reasonably possible to estimate the increase or decrease in unrecognized tax benefits within the next 12 months. Note 13—Legal Matters The Company is a party to various legal and regulatory proceedings. Some of these proceedings involve complex claims that are subject to substantial uncertainties and unascertainable damages. For those proceedings where a loss is determined to be only reasonably possible or probable but not estimable, the Company has disclosed the nature of the claim. Additionally, unless otherwise disclosed below with respect to these proceedings, the Company cannot provide an estimate of the possible loss or range of loss. Although the Company believes that it has strong defenses for the litigation and regulatory proceedings described below, it could, in the future, incur judgments or fines or enter into settlements of claims that could have a material adverse effect on the Company’s financial position, results of operations or cash flows. From time to time, the Company may engage in settlement discussions or mediations with respect to one or more of its outstanding litigation matters, either on its own behalf or collectively with other parties. The litigation accrual is an estimate and is based on management’s understanding of its litigation profile, the specifics of each case, advice of counsel to the extent appropriate and management’s best estimate of incurred loss as of the balance sheet date. 20 Table of Contents The following table summarizes the activity related to accrued litigation: Three Months Ended December 31, 2024 2023 (in millions) Balance as of beginning of period $ 1,727 $ 1,751 Provision for uncovered legal matters 17 10 Provision for covered legal matters 34 22 Payments for legal matters ( 129 ) ( 312 ) Balance as of end of period $ 1,649 $ 1,471 Accrual Summary—U.S. Covered Litigation Visa Inc., Visa U.S.A. and Visa International are parties to certain legal proceedings that are covered by the U.S. retrospective responsibility plan, which the Company refers to as the U.S. covered litigation. An accrual for the U.S. covered litigation and a charge to the litigation provision are recorded when a loss is deemed to be probable and reasonably estimable. In making this determination, the Company evaluates available information, including but not limited to actions taken by the Company’s litigation committee. The total accrual related to the U.S. covered litigation could be either higher or lower than the escrow account balance. See further discussion below under U.S. Covered Litigation and Note 5—U.S. and Europe Retrospective Responsibility Plans. The following table summarizes the accrual activity related to U.S. covered litigation: Three Months Ended December 31, 2024 2023 (in millions) Balance as of beginning of period $ 1,537 $ 1,621 Provision for interchange multidistrict litigation 27 — Payments for U.S. covered litigation — ( 160 ) Balance as of end of period $ 1,564 $ 1,461 For the three months ended December 31, 2024, the Company recorded an additional accrual of $ 27 million to address claims associated with the interchange multidistrict litigation. The accrual balance is consistent with the Company’s best estimate of its share of a probable and reasonably estimable loss with respect to the U.S. covered litigation. While this estimate is consistent with the Company’s view of the current status of the litigation, the probable and reasonably estimable loss or range of such loss could materially vary based on developments in the litigation. The Company will continue to consider and reevaluate this estimate in light of the substantial uncertainties with respect to the litigation. The Company is unable to estimate a potential loss or range of loss, if any, at trial if negotiated resolutions cannot be reached. Accrual Summary—VE Territory Covered Litigation Visa Inc., Visa International and Visa Europe are parties to certain legal proceedings that are covered by the Europe retrospective responsibility plan. Unlike the U.S. retrospective responsibility plan, the Europe retrospective responsibility plan does not have an escrow account that is used to fund settlements or judgments. The Company is entitled to recover VE territory covered losses through periodic adjustments to the class A common stock conversion rates applicable to the series B and C preferred stock. An accrual for the VE territory covered losses and a reduction to stockholders’ equity will be recorded when the loss is deemed to be probable and reasonably estimable. See further discussion below under VE Territory Covered Litigation and Note 5—U.S. and Europe Retrospective Responsibility Plans . 21 Table of Contents The following table summarizes the accrual activity related to VE territory covered litigation: Three Months Ended December 31, 2024 2023 (in millions) Balance as of beginning of period $ 72 $ 110 Provision for VE territory covered litigation 7 22 Payments for VE territory covered litigation ( 21 ) ( 126 ) Balance as of end of period $ 58 $ 6 U.S. Covered Litigation Interchange Multidistrict Litigation (MDL) - Individual Merchant Actions Visa has reached settlements with a number of merchants representing approximately 74 % of the Visa-branded payment card sales volume of merchants who opted out of the Amended Settlement Agreement with the Damages Class plaintiffs. On November 15, 2024, defendants served a motion for injunction compelling dismissal of claims by Intuit and Block. On December 18, 2024, in the actions led by Target Corporation and by 7-Eleven, Inc., the U.S. District Court for the Southern District of New York denied defendants’ motion for a revised summary judgment ruling based on Illinois Brick. Consumer Interchange Litigation On December 20, 2024, the district court adopted the magistrate judge’s recommendation to deny defendants’ motion to compel arbitration and grant defendants’ motion to dismiss plaintiffs’ California law claims, and plaintiffs moved for reconsideration. VE Territory Covered Litigation Europe Merchant Litigation On December 19, 2024 the UK Court of Appeal issued a decision restricting Merchant damages to six years preceding the claim filing. The six-year limitation period will apply to all existing and future Merchant claims brought under English law in the Courts of England and Wales. Other Litigation U.S. Department of Justice On December 16, 2024, Visa filed a motion to dismiss the complaint. U.S. Debit Class Actions On November 26, 2024, plaintiffs in the four putative class actions brought on behalf of merchants then-pending in the U.S. District Court for the Southern District of New York moved to consolidate their cases, appoint interim leadership, and enter an interim schedule, which the court granted. On December 16, 2024, those plaintiffs filed an amended consolidated complaint. On December 13, 2024, plaintiffs in three putative class actions brought on behalf of cardholders pending in or being transferred to the U.S. District Court for the Southern District of New York moved to consolidate their cases, appoint interim leadership and enter an interim schedule, which the court granted. Two remaining cardholder actions were subsequently transferred to that court. On December 27, 2024, plaintiffs in the consolidated cardholder actions filed an amended consolidated complaint. On January 29, 2025, an additional putative class action brought on behalf of merchants was filed in the U.S. District Court for the Southern District of New York. 22 Table of Contents U.S. Securities Class Action On November 20, 2024, Beibei Cai filed a putative securities class action in the U.S. District Court for the Northern District of California against Visa Inc., and certain of our officers on behalf of all persons or entities who purchased or otherwise acquired publicly traded Visa securities between November 16, 2023 and September 23, 2024. The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 in failing to disclose that Visa was in violation of U.S. federal antitrust laws, as was alleged in the lawsuit filed by the U.S. Department of Justice on September 24, 2024 (see U.S. Department of Justice matter). The plaintiff seeks a ruling that this case may proceed as a class action, and seeks damages, attorneys’ fees, and costs. Debit Surcharge Class Action On December 4, 2024, James Williams filed a putative class action in the U.S. District Court for the Northern District of California against Visa Inc. on behalf of a nationwide class of all persons in the United States who paid a surcharge when completing a purchase with a Visa debit card in a transaction with a merchant located in the United States since 2010. The complaint claims that Visa has failed to enforce its rules prohibiting merchants from surcharging those transactions, and that plaintiff and putative class members have been harmed as a result. Plaintiff asserts breach of contract, unjust enrichment and unfair competition claims, and seeks monetary damages, declaratory and injunctive relief. U.S. ATM Access Fee Litigation On December 6, 2024, plaintiffs in the Mackmin action filed a motion for final approval of the class action settlement with Visa and Mastercard. 23 Table of Contents