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, 2021

OR

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

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		94128-8999
San Francisco,	California
(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	V	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 23, 2021, there were 1,687,643,027 shares outstanding of the registrant’s class A common stock, par value $0.0001 per share, 245,513,385 shares outstanding of the registrant’s class B common stock, par value $0.0001 per share, and 10,188,730 shares outstanding of the registrant’s class C common stock, par value $0.0001 per share.

VISA INC.

TABLE OF CONTENTS

 

		Page
PART I.	Financial Information	4
Item 1.	Financial Statements (Unaudited)	4
	Consolidated Balance Sheets—June 30, 2021 and September 30, 2020	4
	Consolidated Statements of Operations—Three and Nine Months Ended June 30, 2021 and 2020	5
	Consolidated Statements of Comprehensive Income—Three and Nine Months Ended June 30, 2021 and 2020	6
	Consolidated Statements of Changes in Equity—Three and Nine Months Ended June 30, 2021 and 2020	7
	Consolidated Statements of Cash Flows—Nine Months Ended June 30, 2021 and 2020	11
	Notes to Consolidated Financial Statements (Unaudited)	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37
PART II.	Other Information	38
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	40
	Signatures	41

3

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements (Unaudited)

VISA INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30, 2021		September 30, 2020
	(in millions, except per share data)
Assets
Cash and cash equivalents	$	18,034	$	16,289
Restricted cash equivalents—U.S. litigation escrow	894		901
Investment securities	1,206		3,752
Settlement receivable	1,663		1,264
Accounts receivable	1,852		1,618
Customer collateral	2,221		1,850
Current portion of client incentives	1,321		1,214
Prepaid expenses and other current assets	851		757
Total current assets	28,042		27,645
Investment securities	1,111		231
Client incentives	3,219		3,175
Property, equipment and technology, net	2,707		2,737
Goodwill	16,021		15,910
Intangible assets, net	28,023		27,808
Other assets	3,548		3,413
Total assets	$	82,671	$	80,919
Liabilities
Accounts payable	$	172	$	174
Settlement payable	2,376		1,736
Customer collateral	2,221		1,850
Accrued compensation and benefits	1,044		821
Client incentives	5,114		4,176
Accrued liabilities	2,196		1,840
Current maturities of debt	—		2,999
Accrued litigation	900		914
Total current liabilities	14,023		14,510
Long-term debt	20,996		21,071
Deferred tax liabilities	6,240		5,237
Other liabilities	3,622		3,891
Total liabilities	44,881		44,709
Equity
Preferred stock, $0.0001 par value, 25 shares authorized and 5 shares issued and outstanding as follows:
Series A convertible participating preferred stock, less than one shares issued and outstanding at June 30, 2021 and September 30, 2020 (the “series A preferred stock”)	538		2,437
Series B convertible participating preferred stock, 2 shares issued and outstanding at June 30, 2021 and September 30, 2020 (the “UK&I preferred stock”)	1,071		1,106
Series C convertible participating preferred stock, 3 shares issued and outstanding at June 30, 2021 and September 30, 2020 (the “Europe preferred stock”)	1,523		1,543
Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 1,689 and 1,683 shares issued and outstanding at June 30, 2021 and September 30, 2020, respectively	—		—
Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at June 30, 2021 and September 30, 2020	—		—
Class C common stock, $0.0001 par value, 1,097 shares authorized, 10 and 11 shares issued and outstanding at June 30, 2021 and September 30, 2020, respectively	—		—
Right to recover for covered losses	(24)		(39)
Additional paid-in capital	18,787		16,721
Accumulated income	15,294		14,088
Accumulated other comprehensive income (loss), net:
Investment securities	(1)		3
Defined benefit pension and other postretirement plans	(187)		(196)
Derivative instruments	(371)		(291)
Foreign currency translation adjustments	1,160		838
Total accumulated other comprehensive income (loss), net	601		354
Total equity	37,790		36,210
Total liabilities and equity	$	82,671	$	80,919

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

4

VISA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended June 30,				Nine Months Ended June 30,
	2021		2020		2021		2020
	(in millions, except per share data)
Net revenues	$	6,130	$	4,837	$	17,546	$	16,745
Operating Expenses
Personnel	1,098		941		3,193		2,863
Marketing	268		174		679		683
Network and processing	186		172		538		536
Professional fees	108		95		273		304
Depreciation and amortization	204		197		602		571
General and administrative	204		258		770		840
Litigation provision	(2)		1		2		9
Total operating expenses	2,066		1,838		6,057		5,806
Operating income	4,064		2,999		11,489		10,939
Non-operating Income (Expense)
Interest expense, net	(131)		(142)		(388)		(371)
Investment income and other	456		75		664		167
Total non-operating income (expense)	325		(67)		276		(204)
Income before income taxes	4,389		2,932		11,765		10,735
Income tax provision	1,814		559		3,038		2,006
Net income	$	2,575	$	2,373	$	8,727	$	8,729
Basic Earnings Per Share
Class A common stock	$	1.18	$	1.07	$	3.99	$	3.92
Class B common stock	$	1.92	$	1.74	$	6.47	$	6.37
Class C common stock	$	4.72	$	4.29	$	15.94	$	15.70
Basic Weighted-average Shares Outstanding
Class A common stock	1,691		1,690		1,693		1,702
Class B common stock	245		245		245		245
Class C common stock	10		11		11		11
Diluted Earnings Per Share
Class A common stock	$	1.18	$	1.07	$	3.98	$	3.92
Class B common stock	$	1.91	$	1.74	$	6.46	$	6.36
Class C common stock	$	4.72	$	4.29	$	15.92	$	15.68
Diluted Weighted-average Shares Outstanding
Class A common stock	2,184		2,214		2,192		2,227
Class B common stock	245		245		245		245
Class C common stock	10		11		11		11

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

5

VISA INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended June 30,				Nine Months Ended June 30,
	2021		2020		2021		2020
	(in millions)
Net income	$	2,575	$	2,373	$	8,727	$	8,729
Other comprehensive income (loss), net of tax:
Investment securities:
Net unrealized gain (loss)	(2)		(3)		(4)		2
Income tax effect	1		1		1		—
Reclassification adjustments	(1)		(1)		(1)		(3)
Income tax effect	—		1		—		1
Defined benefit pension and other postretirement plans:
Net unrealized actuarial gain (loss) and prior service credit (cost)	—		—		(3)		2
Income tax effect	—		—		2		(1)
Reclassification adjustments	7		9		13		15
Income tax effect	(2)		(2)		(3)		(3)
Derivative instruments:
Net unrealized gain (loss)	(95)		(106)		(112)		(247)
Income tax effect	22		23		28		54
Reclassification adjustments	14		(43)		1		(58)
Income tax effect	(2)		9		3		13
Foreign currency translation adjustments	287		277		322		621
Other comprehensive income (loss), net of tax	229		165		247		396
Comprehensive income	$	2,804	$	2,538	$	8,974	$	9,125

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

6

VISA INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

	Three Months Ended June 30, 2021
	Preferred Stock				Common Stock				Preferred Stock		Right to Recover for Covered Losses		Additional Paid-In Capital		Accumulated Income		Accumulated Other Comprehensive  Income (Loss), Net		Total Equity
	Series A		Series B	Series C	Class A		Class B	Class C
	(in millions, except per share data)
Balance as of March 31, 2021	—	(1)	2	3	1,694		245	11	$	3,347	$	(41)	$	18,505	$	15,513	$	372	$	37,696
Net income															2,575				2,575
Other comprehensive income (loss), net of tax																	229		229
Comprehensive income																			2,804
VE territory covered losses incurred											(21)								(21)
Recovery through conversion rate adjustment									(40)		38								(2)
Conversion of series A preferred stock upon sales into public market	—	(1)			3				(175)				175						—
Conversion of class C common stock upon sales into public market					2			(1)											—
Vesting of restricted stock and performance-based shares					—	(1)													—
Share-based compensation, net of forfeitures													159						159
Restricted stock and performance-based shares settled in cash for taxes					—	(1)							(2)						(2)
Cash proceeds from issuance of class A common stock under employee equity plans					—	(1)							54						54
Cash dividends declared and paid, at a quarterly amount of $0.32 per class A common stock															(698)				(698)
Repurchase of class A common stock					(10)								(104)		(2,096)				(2,200)
Balance as of June 30, 2021	—	(1)	2	3	1,689		245	10	$	3,132	$	(24)	$	18,787	$	15,294	$	601	$	37,790

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

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

7

VISA INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

(UNAUDITED)

	Nine Months Ended June 30, 2021
	Preferred Stock				Common Stock			Preferred Stock		Right to Recover for Covered Losses		Additional Paid-In Capital		Accumulated Income		Accumulated Other Comprehensive  Income (Loss), Net		Total Equity
	Series A		Series B	Series C	Class A	Class B	Class C
	(in millions, except per share data)
Balance as of September 30, 2020	—	(1)	2	3	1,683	245	11	$	5,086	$	(39)	$	16,721	$	14,088	$	354	$	36,210
Net income														8,727				8,727
Other comprehensive income (loss), net of tax																247		247
Comprehensive income																		8,974
Adoption of new accounting standards														3				3
VE territory covered losses incurred										(38)								(38)
Recovery through conversion rate adjustment								(55)		53								(2)
Conversion of series A preferred stock upon sales into public market	—	(1)			28			(1,899)				1,899						—
Conversion of class C common stock upon sales into public market					2		(1)											—
Vesting of restricted stock and performance-based shares					3													—
Share-based compensation, net of forfeitures												434						434
Restricted stock and performance-based shares settled in cash for taxes					(1)							(142)						(142)
Cash proceeds from issuance of common stock under employee equity plans					1							162						162
Cash dividends declared and paid, at a quarterly amount of $0.32 per class A common stock														(2,102)				(2,102)
Repurchase of class A common stock					(27)							(287)		(5,422)				(5,709)
Balance as of June 30, 2021	—	(1)	2	3	1,689	245	10	$	3,132	$	(24)	$	18,787	$	15,294	$	601	$	37,790

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

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

8

VISA INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

(UNAUDITED)

	Three Months Ended June 30, 2020
	Preferred Stock		Common Stock				Preferred Stock		Right to Recover for Covered Losses		Additional Paid-In Capital		Accumulated Income		Accumulated Other Comprehensive  Income (Loss), Net		Total Equity
	Series B	Series C	Class A		Class B	Class C
	(in millions, except per share data)
Balance as of March 31, 2020	2	3	1,693		245	11	$	5,462	$	(184)	$	16,385	$	13,366	$	(444)	$	34,585
Net income													2,373				2,373
Other comprehensive income (loss), net of tax															165		165
Comprehensive income																	2,538
VE territory covered losses incurred									(9)								(9)
Recovery through conversion rate adjustment							(164)		169								5
Vesting of restricted stock and performance-based shares			—	(1)													—
Share-based compensation, net of forfeitures											107						107
Restricted stock and performance-based shares settled in cash for taxes			—	(1)							(3)						(3)
Cash proceeds from issuance of class A common stock under employee equity plans			—	(1)							33						33
Cash dividends declared and paid, at a quarterly amount of $0.30 per class A common stock													(663)				(663)
Repurchase of class A common stock			(6)								(65)		(1,004)				(1,069)
Balance as of June 30, 2020	2	3	1,687		245	11	$	5,298	$	(24)	$	16,457	$	14,072	$	(279)	$	35,524

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

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

9

VISA INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

(UNAUDITED)

	Nine Months Ended June 30, 2020
	Preferred Stock		Common Stock				Preferred Stock		Right to Recover for Covered Losses		Additional Paid-In Capital		Accumulated Income		Accumulated Other Comprehensive  Income (Loss), Net		Total Equity
	Series B	Series C	Class A	Class B	Class C
	(in millions, except per share data)
Balance as of September 30, 2019	2	3	1,718	245	11		$	5,462	$	(171)	$	16,541	$	13,502	$	(650)	$	34,684
Net income													8,729				8,729
Other comprehensive income (loss), net of tax															396		396
Comprehensive income																	9,125
Adoption of new accounting standards													25		(25)		—
VE territory covered losses incurred									(22)								(22)
Recovery through conversion rate adjustment							(164)		169								5
Conversion of class C common stock upon sales into public market			3		—	(1)											—
Vesting of restricted stock and performance-based shares			3														—
Share-based compensation, net of forfeitures											322						322
Restricted stock and performance-based shares settled in cash for taxes			(1)								(158)						(158)
Cash proceeds from issuance of common stock under employee equity plans			1								142						142
Cash dividends declared and paid, at a quarterly amount of $0.30 per class A common stock													(2,002)				(2,002)
Repurchase of class A common stock			(37)								(390)		(6,182)				(6,572)
Balance as of June 30, 2020	2	3	1,687	245	11		$	5,298	$	(24)	$	16,457	$	14,072	$	(279)	$	35,524

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

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

10

VISA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended June 30,
	2021		2020
	(in millions)
Operating Activities
Net income	$	8,727	$	8,729
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Client incentives	5,980		4,966
Share-based compensation	434		322
Depreciation and amortization of property, equipment, technology and intangible assets	602		571
Deferred income taxes	981		(116)
VE territory covered losses incurred	(38)		(22)
(Gains) losses on equity investments, net	(611)		(62)
Other	(82)		(87)
Change in operating assets and liabilities:
Settlement receivable	(351)		966
Accounts receivable	(220)		108
Client incentives	(5,202)		(6,261)
Other assets	(164)		(464)
Accounts payable	1		7
Settlement payable	574		(1,324)
Accrued and other liabilities	639		1,058
Accrued litigation	(14)		(47)
Net cash provided by (used in) operating activities	11,256		8,344
Investing Activities
Purchases of property, equipment and technology	(497)		(568)
Investment securities:
Purchases	(3,223)		(549)
Proceeds from maturities and sales	5,286		3,675
Acquisitions, net of cash acquired	(75)		(77)
Purchases of / contributions to other investments	(50)		(254)
Other investing activities	105		81
Net cash provided by (used in) investing activities	1,546		2,308
Financing Activities
Repurchase of class A common stock	(5,709)		(6,572)
Repayments of debt	(3,000)		—
Dividends paid	(2,102)		(2,002)
Proceeds from issuance of senior notes	—		3,985
Cash proceeds from issuance of class A common stock under employee equity plans	162		142
Restricted stock and performance-based shares settled in cash for taxes	(142)		(158)
Other financing activities	—		(118)
Net cash provided by (used in) financing activities	(10,791)		(4,723)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents	92		173
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents	2,103		6,102
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period	19,171		10,832
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	21,274	$	16,934
Supplemental Disclosure
Cash paid for income taxes, net	$	2,134	$	1,793
Interest payments on debt	$	583	$	503
Accruals related to purchases of property, equipment and technology	$	52	$	34

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

11

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1—Summary of Significant Accounting Policies

Organization. Visa Inc. (“Visa” or the “Company”) is a global payments technology company that enables innovative, secure and reliable electronic payments across more than 200 countries and territories. Visa and its wholly-owned consolidated subsidiaries, including Visa U.S.A. Inc. (“Visa U.S.A.”), Visa International Service Association (“Visa International”), Visa Worldwide Pte. Limited, Visa Europe Limited (“Visa Europe”), Visa Canada Corporation (“Visa Canada”), Visa Technology & Operations LLC and CyberSource Corporation, operate one of the world’s largest electronic payments network — VisaNet — which facilitates authorization, clearing and settlement of payment transactions and enables the Company to provide its financial institution and seller clients a wide range of products, platforms and value added services. 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. All significant intercompany accounts and transactions are 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 the Visa Annual Report on Form 10-K for the year ended September 30, 2020 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.

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 revenues 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 unaudited consolidated financial statements in the period in which such changes occur. Future actual results could differ materially from these estimates. Coronavirus (“COVID-19”) has continued to create significant uncertainty in the global economy. There have been no comparable recent events that provide guidance as to the effect COVID-19 as a global pandemic may have, and, as a result, the ultimate impact of COVID-19 and the extent to which COVID-19 continues to impact the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Board Update (“ASU”) 2016-13, which requires the measurement and recognition of expected credit losses for financial assets and certain other instruments held at amortized cost. The Company adopted the standard effective October 1, 2020 using the modified retrospective transition method with comparative periods continuing to be reported using the previous applicable guidance. The adoption did not have a material impact on the consolidated financial statements.

In accordance with ASU 2016-13, the Company uses a forward-looking expected credit loss model for financial instruments measured at amortized cost. For available-for-sale debt securities, when credit loss indicators exist and a discounted cash flow approach results in a credit loss, the credit loss will be recorded through an allowance rather

12