VISA INC. [V] Filings

10-Q 1 v-20240630.htm 10-Q v-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-33977

VISA INC.

(Exact name of Registrant as specified in its charter)

Delaware

26-0267673

(State or other jurisdiction
of incorporation or organization)

(IRS Employer
Identification No.)

P.O. Box 8999

San Francisco,

California

94128-8999

(Address of principal executive offices)

(Zip Code)

(650) 432-3200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Class A Common Stock, par value $0.0001 per share

New York Stock Exchange

1.500% Senior Notes due 2026

V26

New York Stock Exchange

2.000% Senior Notes due 2029

V29

New York Stock Exchange

2.375% Senior Notes due 2034

V34

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of July 17, 2024, there were 1,670,444,965 shares outstanding of the registrant’s class A common stock, par value $0.0001 per share, 4,835,384 shares outstanding of the registrant’s class B-1 common stock, par value $0.0001 per share, 120,338,948 shares outstanding of the registrant’s class B-2 common stock, par value $0.0001 per share, and 26,686,926 shares outstanding of the registrant’s class C common stock, par value $0.0001 per share.

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VISA

TABLE OF CONTENTS



		Page
PART I.	Financial Information	3

Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets—June 30, 2024 and September 30, 2023	3
	Consolidated Statements of Operations—Three and Nine Months Ended June 30, 2024 and 2023	4
	Consolidated Statements of Comprehensive Income—Three and Nine Months Ended June 30, 2024 and 2023	5
	Consolidated Statements of Changes in Equity—Three and Nine Months Ended June 30, 2024 and 2023	6
	Consolidated Statements of Cash Flows—Nine Months Ended June 30, 2024 and 2023	10
	Notes to Consolidated Financial Statements (Unaudited)	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	38

PART II.	Other Information	39

Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	41
	Signatures	42

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PART I. FINANCIAL INFORMATION


ITEM 1.			Financial Statements (Unaudited)

VISA

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	June 30, 2024		September 30, 2023
	(in millions, except per share data)
Assets
Cash and cash equivalents	$	12,947	$	16,286
Restricted cash equivalents—U.S. litigation escrow	1,596		1,764
Investment securities	3,697		3,842
Settlement receivable	2,128		2,183
Accounts receivable	2,521		2,291
Customer collateral	3,472		3,005
Current portion of client incentives	1,821		1,577
Prepaid expenses and other current assets	2,857		2,584
Total current assets	31,039		33,532
Investment securities	3,037		1,921
Client incentives	4,133		3,789
Property, equipment and technology, net	3,766		3,425
Goodwill	18,816		17,997
Intangible assets, net	26,243		26,104
Other assets	4,006		3,731
Total assets	$	91,040	$	90,499
Liabilities
Accounts payable	$	331	$	375
Settlement payable	2,576		3,269
Customer collateral	3,472		3,005
Accrued compensation and benefits	1,251		1,506
Client incentives	8,562		8,177
Accrued liabilities	4,732		5,015

Accrued litigation	1,688		1,751
Total current liabilities	22,612		23,098
Long-term debt	20,602		20,463
Deferred tax liabilities	5,119		5,114
Other liabilities	2,978		3,091
Total liabilities	51,311		51,766
Commitments and contingencies (Note 13)
Equity
Preferred stock, $0.0001 par value, 5 shares issued and outstanding as of June 30, 2024 and September 30, 2023	1,425		1,698

Common stock, $0.0001 par value:
Class A common stock, 1,678 and 1,594 shares issued and outstanding as of June 30, 2024 and September 30, 2023, respectively	—		—
Class B-1 and B-2 total common stock, 125 and 245 shares issued and outstanding as of June 30, 2024 and September 30, 2023, respectively	—		—
Class C common stock, 27 and 10 shares issued and outstanding as of June 30, 2024 and September 30, 2023, respectively	—		—



Right to recover for covered losses	(46)		(140)
Additional paid-in capital	20,832		20,452
Accumulated income	18,578		18,040
Accumulated other comprehensive income (loss):
Investment securities	(19)		(64)
Defined benefit pension and other postretirement plans	(145)		(155)
Derivative instruments	(120)		(177)
Foreign currency translation adjustments	(776)		(921)
Total accumulated other comprehensive income (loss)	(1,060)		(1,317)
Total equity	39,729		38,733
Total liabilities and equity	$	91,040	$	90,499

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended June 30,				Nine Months Ended June 30,
	2024		2023		2024		2023
	(in millions, except per share data)






Net revenue	$	8,900	$	8,123	$	26,309	$	24,044

Operating Expenses
Personnel	1,573		1,481		4,655		4,333
Marketing	378		297		1,009		938
Network and processing	200		182		570		539
Professional fees	152		133		443		372
Depreciation and amortization	264		235		760		696
General and administrative	382		314		1,174		918
Litigation provision	13		457		452		798

Total operating expenses	2,962		3,099		9,063		8,594
Operating income	5,938		5,024		17,246		15,450

Non-operating Income (Expense)
Interest expense	(196)		(182)		(465)		(461)
Investment income (expense) and other	247		304		763		412
Total non-operating income (expense)	51		122		298		(49)
Income before income taxes	5,989		5,146		17,544		15,401
Income tax provision	1,117		990		3,119		2,809
Net income	$	4,872	$	4,156	$	14,425	$	12,592

Basic Earnings Per Share
Class A common stock	$	2.40	$	2.00	$	7.09	$	6.03
Class B-1 common stock	$	3.82	$	3.20	$	11.25	$	9.65
Class B-2 common stock(1)	$	3.82	$	—	$	11.25	$	—
Class C common stock	$	9.62	$	8.00	$	28.35	$	24.10

Basic Weighted-average Shares Outstanding
Class A common stock	1,610		1,614		1,591		1,623
Class B-1 common stock	97		245		196		245
Class B-2 common stock(1)	74		—		25		—
Class C common stock	29		10		16		10

Diluted Earnings Per Share
Class A common stock	$	2.40	$	2.00	$	7.08	$	6.02
Class B-1 common stock	$	3.81	$	3.19	$	11.24	$	9.64
Class B-2 common stock(1)	$	3.81	$	—	$	11.24	$	—
Class C common stock	$	9.60	$	7.99	$	28.31	$	24.08

Diluted Weighted-average Shares Outstanding
Class A common stock	2,029		2,080		2,038		2,092
Class B-1 common stock	97		245		196		245
Class B-2 common stock(1)	74		—		25		—
Class C common stock	29		10		16		10

(1) No shares of class B-2 common stock were outstanding prior to the class B-1 common stock exchange offer. See Note 9—Stockholders’ Equity for further details.

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


	Three Months Ended June 30,				Nine Months Ended June 30,
	2024		2023		2024		2023
	(in millions)
Net income	$	4,872	$	4,156	$	14,425	$	12,592
Other comprehensive income (loss):
Investment securities:
Net unrealized gain (loss)	7		(18)		57		33
Income tax effect	(1)		4		(12)		(7)


Defined benefit pension and other postretirement plans:
Net unrealized actuarial gain (loss) and prior service credit (cost)	—		1		8		6
Income tax effect	—		—		(2)		(1)
Reclassification adjustments	—		3		6		7
Income tax effect	—		(1)		(2)		(1)
Derivative instruments:
Net unrealized gain (loss)	73		(4)		54		(195)
Income tax effect	(11)		5		(2)		36
Reclassification adjustments	(21)		18		12		17
Income tax effect	1		(10)		(7)		(17)
Foreign currency translation adjustments:
Translation adjustments	(100)		14		131		1,513
Income tax effect	(10)		—		14		—
Other comprehensive income (loss)	(62)		12		257		1,391
Comprehensive income	$	4,810	$	4,168	$	14,682	$	13,983

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)



	Three Months Ended June 30, 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 March 31, 2024	5		$	1,602	1,828		$	20,709		$	(175)	$	19,347	$	(998)	$	40,485
Net income												4,872				4,872
Other comprehensive income (loss)														(62)		(62)
VE territory covered losses incurred										(21)						(21)
Recovery through conversion rate adjustment			(156)							150						(6)

Conversions to class A common stock	—	(1)	(21)		91		21									—
Class B-1 common stock exchange offer					(73)		—		(1)							—
Share-based compensation							211									211
Stock issued under equity plans					1		84									84
Restricted stock and performance-based shares settled in cash for taxes					—	(1)	(8)									(8)
Cash dividends declared and paid, at a quarterly amount of $0.52 per class A common stock												(1,056)				(1,056)
Repurchases of class A common stock					(17)		(185)					(4,585)				(4,770)
Balance as of June 30, 2024	5		$	1,425	1,830		$	20,832		$	(46)	$	18,578	$	(1,060)	$	39,729

(1)Increase or decrease is less than one million.

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

(UNAUDITED)


	Nine Months Ended June 30, 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, 2023	5		$	1,698	(1)	1,849	$	20,452		$	(140)	$	18,040	$	(1,317)	$	38,733
Net income												14,425				14,425
Other comprehensive income (loss)														257		257
VE territory covered losses incurred										(81)						(81)
Recovery through conversion rate adjustment			(181)							175						(6)

Conversions to class A common stock	—	(2)	(92)			93	92									—
Class B-1 common stock exchange offer						(73)	—		(2)							—
Share-based compensation							662									662
Stock issued under equity plans						4	267									267
Restricted stock and performance-based shares settled in cash for taxes						(1)	(189)									(189)
Cash dividends declared and paid, at a quarterly amount of $0.52 per class A common stock												(3,176)				(3,176)
Repurchases of class A common stock						(42)	(452)					(10,711)				(11,163)
Balance as of June 30, 2024	5		$	1,425	(1)	1,830	$	20,832		$	(46)	$	18,578	$	(1,060)	$	39,729

(1)As of June 30, 2024 and September 30, 2023, the book value of series A preferred stock was $364 million and $456 million, respectively. Refer to 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.

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VISA

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

(UNAUDITED)



	Three Months Ended June 30, 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 March 31, 2023	5		$	1,885	1,874	$	20,095	$	(35)	$	17,610	$	(990)	$	38,565
Net income										4,156				4,156
Other comprehensive income (loss)												12		12
VE territory covered losses incurred								(6)						(6)
Recovery through conversion rate adjustment			(16)					16						—

Conversions to class A common stock	—	(1)	(83)		1	83								—
Share-based compensation						191								191
Stock issued under equity plans					1	71								71
Restricted stock and performance-based shares settled in cash for taxes					(1)	(7)								(7)
Cash dividends declared and paid, at a quarterly amount of $0.45 per class A common stock										(937)				(937)
Repurchases of class A common stock					(13)	(143)				(2,921)				(3,064)
Balance as of June 30, 2023	5		$	1,786	1,862	$	20,290	$	(25)	$	17,908	$	(978)	$	38,981

(1)Increase or decrease is less than one million.

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

(UNAUDITED)


	Nine Months Ended June 30, 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, 2022	5		$	2,324	(1)	1,890	$	19,545	$	(35)	$	16,116	$	(2,369)	$	35,581
Net income											12,592				12,592
Other comprehensive income (loss)													1,391		1,391

VE territory covered losses incurred									(21)						(21)
Recovery through conversion rate adjustment			(30)						31						1

Conversions to class A common stock	—	(2)	(508)			8	508								—
Share-based compensation							591								591
Stock issued under equity plans						4	189								189
Restricted stock and performance-based shares settled in cash for taxes						(1)	(125)								(125)
Cash dividends declared and paid, at a quarterly amount of $0.45 per class A common stock											(2,823)				(2,823)
Repurchases of class A common stock						(39)	(418)				(7,977)				(8,395)
Balance as of June 30, 2023	5		$	1,786	(1)	1,862	$	20,290	$	(25)	$	17,908	$	(978)	$	38,981

(1)As of June 30, 2023 and September 30, 2022, the book value of series A preferred stock was $544 million and $1.0 billion, respectively. Refer to 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.

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VISA

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine Months Ended June 30,
	2024		2023
	(in millions)
Operating Activities
Net income	$	14,425	$	12,592
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Client incentives	10,135		8,858
Share-based compensation	662		591
Depreciation and amortization	760		696
Deferred income taxes	(99)		(253)
VE territory covered losses incurred	(81)		(21)
(Gains) losses on equity investments, net	48		111
Other	122		(7)
Change in operating assets and liabilities:
Settlement receivable	92		(373)
Accounts receivable	(214)		(228)
Client incentives	(10,317)		(8,188)
Other assets	(173)		(66)
Accounts payable	(27)		(51)
Settlement payable	(765)		114
Accrued and other liabilities	(1,216)		(34)
Accrued litigation	(66)		87
Net cash provided by (used in) operating activities	13,286		13,828
Investing Activities
Purchases of property, equipment and technology	(948)		(754)
Investment securities:
Purchases	(4,443)		(2,817)
Proceeds from maturities and sales	3,866		2,410
Acquisitions, net of cash and restricted cash acquired	(915)		—
Purchases of other investments	(19)		(81)
Settlement of derivative instruments	—		402
Other investing activities	(51)		22
Net cash provided by (used in) investing activities	(2,510)		(818)
Financing Activities
Repurchases of class A common stock	(10,865)		(8,350)
Repayments of debt	—		(2,250)
Dividends paid	(3,176)		(2,823)


Proceeds from issuance of class A common stock under equity plans	267		189
Restricted stock and performance-based shares settled in cash for taxes	(189)		(125)
Other financing activities	399		167
Net cash provided by (used in) financing activities	(13,564)		(13,192)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents	74		844
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents	(2,714)		662
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period	21,990		20,377
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	19,276	$	21,039
Supplemental Disclosure
Cash paid for income taxes, net	$	4,699	$	3,013
Interest payments on debt	$	534	$	568
Accruals related to purchases of property, equipment and technology	$	30	$	87

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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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 its majority-owned and controlled entities, 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, 2023 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

On January 16, 2024, Visa acquired Pismo Holdings, a global cloud-native issuer processing and core banking platform, for a purchase consideration of $929 million. The Company allocated $139 million of the purchase consideration to technology, customer relationships, other net assets acquired and deferred tax liabilities and the remaining $790 million to goodwill.

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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 June 30,				Nine Months Ended June 30,
	2024		2023		2024		2023
	(in millions)
Service revenue	$	3,967	$	3,668	$	11,915	$	10,950
Data processing revenue	4,489		4,105		13,104		11,751
International transaction revenue	3,194		2,920		9,197		8,466
Other revenue	780		597		2,228		1,735
Client incentives	(3,530)		(3,167)		(10,135)		(8,858)
Net revenue	$	8,900	$	8,123	$	26,309	$	24,044


	Three Months Ended June 30,				Nine Months Ended June 30,
	2024		2023		2024		2023
	(in millions)
U.S.	$	3,621	$	3,443	$	10,909	$	10,550
International	5,279		4,680		15,400		13,494
Net revenue	$	8,900	$	8,123	$	26,309	$	24,044

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 June 30, 2024, the remaining performance obligations were $3.7 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:



	June 30, 2024		September 30, 2023
	(in millions)
Cash and cash equivalents	$	12,947	$	16,286
Restricted cash and restricted cash equivalents:
U.S. litigation escrow	1,596		1,764
Customer collateral	3,472		3,005
Prepaid expenses and other current assets	1,261		935
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	19,276	$	21,990

During the nine months ended June 30, 2024, right-of-use assets obtained in exchange for lease liabilities was $387 million.

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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 restricted cash equivalents—U.S. litigation escrow account:


	Nine Months Ended June 30,
	2024		2023
	(in millions)
Balance as of beginning of period	$	1,764	$	1,449
Deposits into the U.S. litigation escrow account	—		850

Payments to opt-out merchants(1), net of interest earned on escrow funds	(168)		(672)
Balance as of end of period	$	1,596	$	1,627

(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 preferred stock and right to recover for covered losses within stockholders’ equity:


	Nine Months Ended June 30, 2024
	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)	—		—		(81)
Recovery through conversion rate adjustment(2)	(161)		(20)		175
Balance as of end of period	$	280	$	781	$	(46)

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	Nine Months Ended June 30, 2023
	Preferred Stock				Right to Recover for Covered Losses
	Series B		Series C
	(in millions)
Balance as of beginning of period	$	460	$	812	$	(35)
VE territory covered losses incurred(1)	—		—		(21)
Recovery through conversion rate adjustment(2)	(19)		(11)		31
Balance as of end of period	$	441	$	801	$	(25)

(1)VE territory covered losses incurred reflect settlements with merchants and additional legal costs. See Note 13—Legal Matters.

(2)Adjustment to right to recover for covered losses for the conversion rate adjustment differs from the actual recovered amount due to differences in foreign exchange rates between the time the losses were incurred and the subsequent recovery through the conversion rate adjustment.

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:


	June 30, 2024				September 30, 2023
	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	$	1,757	$	280	$	1,676	$	441
Series C preferred stock	2,987		781		2,635		801
Total	4,744		1,061		4,311		1,242
Less: right to recover for covered losses	(46)		(46)		(140)		(140)
Total recovery for covered losses available	$	4,698	$	1,015	$	4,171	$	1,102

(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 June 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) 2.6980 and 3.6050, the class A common stock conversion rate applicable to the series B and C preferred stock outstanding, respectively; and (c) $262.47, Visa’s class A common stock closing stock price.

(3)As of September 30, 2023, 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) 2.9370 and 3.6290, the class A common stock conversion rate applicable to the series B and C preferred stock outstanding, respectively; and (c) $230.01, Visa’s class A common stock closing stock price.

As required by the litigation management deed, on June 21, 2024, the eighth anniversary of the Visa Europe acquisition, Visa, in consultation with the VE territories litigation management committee, carried out a release assessment. After the completion of this assessment, the Company released approximately $2.7 billion of the as-converted value from its series B and C preferred stock and issued approximately 99,264 shares of series A preferred stock on July 19, 2024 (Eighth Anniversary Release). Each holder of a share of series B and C preferred stock received a number of series A preferred stock equal to the applicable conversion adjustment divided by 100. The Company paid cash in lieu of issuing fractional shares of series A preferred stock. Each share of series A preferred stock will be automatically converted into 100 shares of class A common stock in connection with a sale to a person eligible to hold class A common stock in accordance with Visa’s certificate of incorporation. Effective July 19, 2024, the release resulted in series B and C conversion rate reductions of 1.6950 and 1.8190, respectively.

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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
	June 30, 2024		September 30, 2023		June 30, 2024		September 30, 2023
	(in millions)
Assets
Cash equivalents and restricted cash equivalents:
Money market funds	$	9,703	$	13,504	$	—	$	—

U.S. Treasury securities	7		301		—		—
Investment securities:
Marketable equity securities	286		339		—		—
U.S. government-sponsored debt securities	—		—		789		1,108
U.S. Treasury securities	5,659		4,316		—		—
Other current and non-current assets:
Money market funds	29		23		—		—
Derivative instruments	—		—		278		293
Total	$	15,684	$	18,483	$	1,067	$	1,401
Liabilities
Accrued compensation and benefits:
Deferred compensation liability	$	229	$	175	$	—	$	—
Accrued and other liabilities:
Derivative instruments	—		—		263		396
Total	$	229	$	175	$	263	$	396

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:


	June 30, 2024
	Amortized Cost		Gross Unrealized				Fair Value
			Gains		Losses
	(in millions)
U.S. government-sponsored debt securities	$	791	$	—	$	(2)	$	789
U.S. Treasury securities	5,688		4		(26)		5,666
Total	$	6,479	$	4	$	(28)	$	6,455

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	September 30, 2023
	Amortized Cost		Gross Unrealized				Fair Value
			Gains		Losses
	(in millions)
U.S. government-sponsored debt securities	$	1,109	$	1	$	(2)	$	1,108
U.S. Treasury securities	4,697		—		(80)		4,617
Total	$	5,806	$	1	$	(82)	$	5,725

Debt securities with unrealized losses for less than 12 months and 12 months or greater were as follows:


	June 30, 2024
	Less Than 12 Months				12 Months or Greater
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in millions)
U.S. government-sponsored debt securities	$	526	$	(1)	$	164	$	(1)
U.S. Treasury securities	2,496		(7)		1,704		(19)
Total	$	3,022	$	(8)	$	1,868	$	(20)


	September 30, 2023
	Less Than 12 Months				12 Months or Greater
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in millions)
U.S. government-sponsored debt securities	$	412	$	(2)	$	50	$	—
U.S. Treasury securities	1,360		(12)		2,128		(68)
Total	$	1,772	$	(14)	$	2,178	$	(68)

The unrealized losses were primarily attributable to changes in interest rates.

The stated maturities of debt securities were as follows:


	June 30, 2024
	(in millions)
Due within one year	$	3,418
Due after one year through five years	3,037
Total	$	6,455

Equity Securities

For the three months ended June 30, 2024 and 2023, the Company recognized net unrealized losses of $16 million and net unrealized gains of $96 million, respectively, on marketable and non-marketable equity securities held as of period end. For the nine months ended June 30, 2024 and 2023, the Company recognized net unrealized losses of $3 million and $85 million, respectively, on marketable and non-marketable equity securities held as of period end.

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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:


	June 30, 2024
	(in millions)
Initial cost basis	$	710
Adjustments:
Upward adjustments	909
Downward adjustments, including impairment	(458)
Carrying amount	$	1,161

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 June 30,				Nine Months Ended June 30,
	2024		2023		2024		2023
	(in millions)
Upward adjustments	$	—	$	75	$	9	$	94
Downward adjustments, including impairment	$	(13)	$	—	$	(28)	$	(86)

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, assets. If measured at fair value in the financial statements, these instruments would be classified as Level 2 in the fair value hierarchy. As of June 30, 2024, the carrying value and estimated fair value of debt was $20.6 billion and $18.3 billion, respectively. As of September 30, 2023, the carrying value and estimated fair value of debt was $20.5 billion and $17.7 billion, respectively.

Other financial instruments not measured at fair value. As of June 30, 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 financial 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 June 30, 2024.

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Note 7—Debt

The Company had outstanding debt as follows:


	June 30, 2024		September 30, 2023		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	1,448		1,434		1.71	%
2.00% Senior Notes due June 2029	1,073		1,062		2.13	%
2.375% Senior Notes due June 2034	697		690		2.53	%
Total debt	20,968		20,936
Unamortized discounts and debt issuance costs	(146)		(159)
Hedge accounting fair value adjustments(2)	(220)		(314)
Total carrying value of debt	$	20,602	$	20,463

Reported as:
Current maturities of debt	$	—	$	—
Long-term debt	20,602		20,463
Total carrying value of debt	$	20,602	$	20,463

(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. During the nine months ended June 30, 2024, the Company’s maximum daily settlement exposure was $136.8 billion and the average daily settlement exposure was $83.4 billion. To mitigate the risk of settlement exposure, the Company holds various forms of collateral including restricted cash, letters of credit, guarantees, beneficial rights to trust assets and pledged securities. As of June 30, 2024, the Company had total collateral of $7.3 billion.

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Note 9—Stockholders’ Equity

As-converted class A common stock. The number of shares of each series and class, and the number of shares of class A common stock on an as-converted basis were as follows:

June 30, 2024

September 30, 2023

Shares
Outstanding

Conversion Rate Into
Class A
Common Stock

As-converted Class A