SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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



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

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

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, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 ~~19, 2019~~24, 2020, there were ~~1,726,971,494~~1,686,007,156 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 ~~11,429,957~~10,859,763 shares outstanding of the registrant’s class C common stock, par value $0.0001 per ~~share,~~share.

Table of ~~Visa Inc. outstanding.~~Contents

VISA INC.

TABLE OF CONTENTS



					Page
PART I.			Financial Information		4


		~~Page~~
~~PART I.~~Item 1.	Financial ~~Information~~Statements (Unaudited)			4

~~Item 1.~~	~~Financial Statements (unaudited)~~			4
	Consolidated Balance Sheets—June ~~30, 2019~~ 3 0 , 2020 and September 30, ~~2018~~2019	4
			Consolidated Statements of Operations—Three and Nine Months Ended June ~~30, 2019~~ 3 0 , 2020 and ~~2018~~2019		5
			Consolidated Statements of Comprehensive Income—Three and Nine Months Ended June ~~30, 2019~~ 3 0 , 2020 and ~~2018~~2019		6
			Consolidated Statements of Changes in Equity—Three and Nine Months Ended June ~~30, 2019~~ 3 0 , 2020 and ~~2018~~2019		7
			Consolidated Statements of Cash Flows—Nine Months Ended June ~~30, 2019~~ 3 0 , 2020 and ~~2018~~2019		11
			Notes to Consolidated Financial Statements ~~(unaudited)~~(Unaudited)		12
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations		3130
Item 3.			Quantitative and Qualitative Disclosures About Market Risk		40
Item 4.			Controls and Procedures		40

PART II.			Other Information		41

Item 1.			Legal Proceedings		41
Item 1A.			Risk Factors		41
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds		41
Item 3.			Defaults Upon Senior Securities		4142
Item 4.			Mine Safety Disclosures		4142
Item 5.			Other Information		4142
Item 6.			Exhibits		4243
			Signatures		4344

Table of Contents

PART I. FINANCIAL INFORMATION



ITEM 1.			Financial Statements (Unaudited)

VISA INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	June 30, 2020		September 30, 2019
	(in millions, except par value data)
Assets
Cash and cash equivalents	$	13,898	$	7,838
Restricted cash equivalents—U.S. litigation escrow (Note 4 and Note 5)	1,148		1,205
Investment securities (Note 6)	2,739		4,236


Settlement receivable	2,111		3,048
Accounts receivable	1,453		1,542
Customer collateral (Note 4 and Note 9)	1,759		1,648
Current portion of client incentives	1,150		741
Prepaid expenses and other current assets	753		712
Total current assets	25,011		20,970
Investment securities (Note 6)	547		2,157
Client incentives	3,168		2,084
Property, equipment and technology, net	2,746		2,695
Goodwill	15,791		15,656
Intangible assets, net	27,188		26,780
Other assets	3,433		2,232
Total assets	$	77,884	$	72,574
Liabilities
Accounts payable	$	153	$	156
Settlement payable	2,725		3,990
Customer collateral (Note 4 and Note 9)	1,759		1,648
Accrued compensation and benefits	703		796
Client incentives	4,208		3,997
Accrued liabilities	2,397		1,625

Current maturities of debt (Note 8)	2,999		0
Accrued litigation (Note 14)	1,156		1,203
Total current liabilities	16,100		13,415
Long-term debt (Note 8)	17,880		16,729
Deferred tax liabilities	4,728		4,807
Other liabilities	3,652		2,939
Total liabilities	42,360		37,890
Equity
Preferred stock, $0.0001 par value, 25 shares authorized and 5 shares issued and outstanding as follows:
Series A convertible participating preferred stock, NaN issued (the “class A equivalent preferred stock”) (Note 10)	0		0
Series B convertible participating preferred stock, 2 shares issued and outstanding at June 30, 2020 and September 30, 2019 (the “UK&I preferred stock”) (Note 5 and Note 10)	2,213		2,285
Series C convertible participating preferred stock, 3 shares issued and outstanding at June 30, 2020 and September 30, 2019 (the “Europe preferred stock”) (Note 5 and Note 10)	3,085		3,177
Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 1,687 and 1,718 shares issued and outstanding at June 30, 2020 and September 30, 2019, respectively (Note 10)	0		0
Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at June 30, 2020 and September 30, 2019 (Note 10)	0		0
Class C common stock, $0.0001 par value, 1,097 shares authorized, 11 shares issued and outstanding at June 30, 2020 and September 30, 2019 (Note 10)	0		0

Right to recover for covered losses (Note 5)	(24)		(171)
Additional paid-in capital	16,457		16,541
Accumulated income	14,072		13,502
Accumulated other comprehensive income (loss), net:
Investment securities	4		6
Defined benefit pension and other postretirement plans	(192)		(192)
Derivative instruments	(39)		199
Foreign currency translation adjustments	(52)		(663)
Total accumulated other comprehensive income (loss), net	(279)		(650)
Total equity	35,524		34,684
Total liabilities and equity	$	77,884	$	72,574

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

June 30,
2019 September 30,
2018
(in millions, except par value data)
Assets
Cash and cash equivalents $ 7,912
$ 8,162
Restricted cash equivalents—U.S. litigation escrow (Note 3 and Note 4) 902
1,491
Investment securities (Note 5) 3,265
3,547
Settlement receivable 1,689
1,582
Accounts receivable 1,531
1,208
Customer collateral (Note 3 and Note 7) 1,668
1,324
Current portion of client incentives 690
340
Prepaid expenses and other current assets 648
562
Total current assets 18,305
18,216
Investment securities (Note 5) 2,918
4,082
Client incentives 1,854
538
Property, equipment and technology, net 2,549
2,472
Goodwill 15,313
15,194
Intangible assets, net 27,272
27,558
Other assets 2,038
1,165
Total assets $ 70,249
$ 69,225
Liabilities
Accounts payable $ 150
$ 183
Settlement payable 2,420
2,168
Customer collateral (Note 3 and Note 7) 1,668
1,325
Accrued compensation and benefits 687
901
Client incentives 3,690
2,834
Accrued liabilities 1,358
1,160
Deferred purchase consideration 0
1,300
Accrued litigation (Note 13) 856
1,434
Total current liabilities 10,829
11,305
Long-term debt (Note 6) 16,694
16,630
Deferred tax liabilities 4,930
4,618
Other liabilities 2,801
2,666
Total liabilities 35,254
35,219
Equity
Preferred stock, $0.0001 par value, 25 shares authorized and 5 shares issued and outstanding as follows:
Series A convertible participating preferred stock, none issued (the “class A equivalent preferred stock”) (Note 9) 0
0
Series B convertible participating preferred stock, 2 shares issued and outstanding at June 30, 2019 and September 30, 2018 (the “UK&I preferred stock”) (Note 4 and Note 9) 2,285
2,291
Series C convertible participating preferred stock, 3 shares issued and outstanding at June 30, 2019 and September 30, 2018 (the “Europe preferred stock”) (Note 4 and Note 9) 3,177
3,179
Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 1,729 and 1,768 shares issued and outstanding at June 30, 2019 and September 30, 2018, respectively (Note 9) 0
0
Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at June 30, 2019 and September 30, 2018 (Note 9) 0
0
Class C common stock, $0.0001 par value, 1,097 shares authorized, 12 shares issued and outstanding at June 30, 2019 and September 30, 2018 (Note 9) 0
0
Right to recover for covered losses (Note 4) (169 ) (7 )
Additional paid-in capital 16,552
16,678
Accumulated income 13,040
11,318
Accumulated other comprehensive income (loss), net:
Investment securities 6
(17 )
Defined benefit pension and other postretirement plans (66 ) (61 )
Derivative instruments 24
60
Foreign currency translation adjustments 146
565
Total accumulated other comprehensive income (loss), net 110
547
Total equity 34,995
34,006
Total liabilities and equity $ 70,249
$ 69,225

Table of Contents

VISA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019
	(in millions, except per share data)






Net revenues	$	4,837	$	5,840	$	16,745	$	16,840

Operating Expenses
Personnel	941		872		2,863		2,573
Marketing	174		282		683		799
Network and processing	172		184		536		528
Professional fees	95		113		304		305
Depreciation and amortization	197		165		571		484
General and administrative	258		315		840		855
Litigation provision (Note 14)	1		1		9		30

Total operating expenses	1,838		1,932		5,806		5,574
Operating income	2,999		3,908		10,939		11,266

Non-operating Income (Expense)
Interest expense, net	(142)		(128)		(371)		(413)
Investment income and other	75		86		167		320
Total non-operating income (expense)	(67)		(42)		(204)		(93)
Income before income taxes	2,932		3,866		10,735		11,173
Income tax provision (Note 13)	559		765		2,006		2,118
Net income	$	2,373	$	3,101	$	8,729	$	9,055

Basic Earnings Per Share (Note 11)
Class A common stock	$	1.07	$	1.37	$	3.92	$	3.98
Class B common stock	$	1.74	$	2.23	$	6.37	$	6.49
Class C common stock	$	4.29	$	5.48	$	15.70	$	15.92

Basic Weighted-average Shares Outstanding (Note 11)
Class A common stock	1,690		1,735		1,702		1,748
Class B common stock	245		245		245		245
Class C common stock	11		12		11		12

Diluted Earnings Per Share (Note 11)
Class A common stock	$	1.07	$	1.37	$	3.92	$	3.97
Class B common stock	$	1.74	$	2.23	$	6.36	$	6.48
Class C common stock	$	4.29	$	5.48	$	15.68	$	15.90

Diluted Weighted-average Shares Outstanding (Note 11)
Class A common stock	2,214		2,265		2,227		2,278
Class B common stock	245		245		245		245
Class C common stock	11		12		11		12

Three Months Ended
June 30, Nine Months Ended
June 30,
2019 2018 2019 2018
(in millions, except per share data)
Net revenues $ 5,840
$ 5,240
$ 16,840
$ 15,175

Operating Expenses
Personnel 872
852
2,573
2,355
Marketing 282
240
799
724
Network and processing 184
169
528
498
Professional fees 113
112
305
312
Depreciation and amortization 165
152
484
450
General and administrative 315
230
855
688
Litigation provision (Note 13) 1
600
30
600
Total operating expenses 1,932
2,355
5,574
5,627
Operating income 3,908
2,885
11,266
9,548

Non-operating Income (Expense)
Interest expense, net (128 ) (155 ) (413 ) (462 )
Investment income and other 86
82
320
182
Total non-operating income (expense) (42 ) (73 ) (93 ) (280 )
Income before income taxes 3,866
2,812
11,173
9,268
Income tax provision (Note 12) 765
483
2,118
1,812
Net income $ 3,101
$ 2,329
$ 9,055
$ 7,456

Basic Earnings Per Share (Note 10)
Class A common stock $ 1.37
$ 1.00
$ 3.98
$ 3.20
Class B common stock $ 2.23
$ 1.66
$ 6.49
$ 5.27
Class C common stock $ 5.48
$ 4.02
$ 15.92
$ 12.78

Basic Weighted-average Shares Outstanding (Note 10)
Class A common stock 1,735
1,784
1,748
1,798
Class B common stock 245
245
245
245
Class C common stock 12
12
12
12

Diluted Earnings Per Share (Note 10)
Class A common stock $ 1.37
$ 1.00
$ 3.97
$ 3.19
Class B common stock $ 2.23
$ 1.65
$ 6.48
$ 5.26
Class C common stock $ 5.48
$ 4.01
$ 15.90
$ 12.76

Diluted Weighted-average Shares Outstanding (Note 10)
Class A common stock 2,265
2,321
2,278
2,337
Class B common stock 245
245
245
245
Class C common stock 12
12
12
12

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

Table of Contents

VISA INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019
	(in millions)
Net income	$	2,373	$	3,101	$	8,729	$	9,055
Other comprehensive income (loss), net of tax:
Investment securities:
Net unrealized gain (loss)	(3)		5		2		20
Income tax effect	1		(1)		0		(5)
Reclassification adjustments	(1)		1		(3)		1
Income tax effect	1		0		1		0
Defined benefit pension and other postretirement plans:
Net unrealized actuarial gain (loss) and prior service credit (cost)	0		(1)		2		(8)
Income tax effect	0		0		(1)		1
Reclassification adjustments	9		2		15		2
Income tax effect	(2)		0		(3)		0
Derivative instruments:
Net unrealized gain (loss)	(106)		(68)		(247)		29
Income tax effect	23		14		54		(9)
Reclassification adjustments	(43)		(22)		(58)		(69)
Income tax effect	9		4		13		13
Foreign currency translation adjustments	277		262		621		(419)
Other comprehensive income (loss), net of tax	165		196		396		(444)
Comprehensive income	$	2,538	$	3,297	$	9,125	$	8,611

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

Three Months Ended
June 30, Nine Months Ended
June 30,
2019 2018 2019 2018
(in millions)
Net income $ 3,101
$ 2,329
$ 9,055
$ 7,456
Other comprehensive income (loss), net of tax:
Investment securities:
Net unrealized gain (loss) 5
45
20
95
Income tax effect (1 ) (10 ) (5 ) (22 )
Reclassification adjustments 1
(24 ) 1
(52 )
Income tax effect 0
6
0
16
Defined benefit pension and other postretirement plans:
Net unrealized actuarial gain (loss) and prior service credit (cost) (1 ) 0
(8 ) (2 )
Income tax effect 0
0
1
1
Reclassification adjustments 2
4
2
4
Income tax effect 0
(1 ) 0
(1 )
Derivative instruments:
Net unrealized gain (loss) (68 ) 114
29
72
Income tax effect 14
(19 ) (9 ) (22 )
Reclassification adjustments (22 ) 10
(69 ) 45
Income tax effect 4
0
13
(5 )
Foreign currency translation adjustments 262
(1,112 ) (419 ) (266 )
Other comprehensive income (loss), net of tax 196
(987 ) (444 ) (137 )
Comprehensive income $ 3,297
$ 1,342
$ 8,611
$ 7,319

Table of Contents

VISA INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(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 (Note 5)									(9)								(9)
Recovery through conversion rate adjustment (Note 5 and 10)							(164)		169								5

Vesting of restricted stock and performance-based shares			0	⁽¹⁾													0
Share-based compensation, net of forfeitures (Note 12)											107						107
Restricted stock and performance-based shares settled in cash for taxes			0	⁽¹⁾							(3)						(3)
Cash proceeds from issuance of common stock under employee equity plans			0	⁽¹⁾							33						33
Cash dividends declared and paid, at a quarterly amount of $0.30 per class A common stock (Note 10)													(663)				(663)
Repurchase of class A common stock (Note 10)			(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

Three Months Ended June 30, 2019
Preferred Stock Common Stock Preferred Stock Right to Recover for Covered Losses
Additional
Paid-In Capital

Accumulated
Income
Accumulated
Other
Comprehensive
Income Total
Equity
UK&I Europe Class A Class B Class C
(in millions, except per share data)
Balance as of March 31, 2019 2
3
1,741
245
12
$ 5,464
$ (163 ) $ 16,547
$ 12,513
$ (86 ) $ 34,275
Net income 3,101
3,101
Other comprehensive income (loss), net of tax 196
196
Comprehensive income 3,297
VE territory covered losses incurred (Note 4) (8 ) (8 )
Recovery through conversion rate adjustment (Note 4 and Note 9) (2 ) 2
—
Conversion of class C common stock upon sales into public market 0
⁽¹⁾
0
⁽¹⁾
—
Vesting of restricted stock and performance-based shares 0
⁽¹⁾
—
Share-based compensation, net of forfeitures (Note 11) 110
110
Restricted stock and performance-based shares settled in cash for taxes 0
⁽¹⁾
(3 ) (3 )
Cash proceeds from issuance of common stock under employee equity plans 1
38
38
Cash dividends declared and paid, at a quarterly amount of $0.25 per Class A share (Note 9) (565 ) (565 )
Repurchase of class A common stock (Note 9) (13 ) (140 ) (2,009 ) (2,149 )
Balance as of June 30, 2019 2
3
1,729
245
12
$ 5,462
$ (169 ) $ 16,552
$ 13,040
$ 110
$ 34,995

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


⁽¹⁾ See accompanying notes, which are an integral part of these unaudited consolidated financial statements. 7 Table of Contents	~~Increase or decrease is less than one million shares.~~

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 (Note 1)													25		(25)		—
VE territory covered losses incurred (Note 5)									(22)								(22)
Recovery through conversion rate adjustment (Note 5 and 10)							(164)		169								5
Conversion of class C common stock upon sales into public market			3		0	⁽¹⁾											—
Vesting of restricted stock and performance-based shares			3														—
Share-based compensation, net of forfeitures (Note 12)											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 (Note 10)													(2,002)				(2,002)
Repurchase of class A common stock (Note 10)			(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

Nine Months Ended June 30, 2019
Preferred Stock Common Stock Preferred Stock Right to Recover for Covered Losses
Additional
Paid-In Capital

Accumulated
Income
Accumulated
Other
Comprehensive
Income Total
Equity
UK&I Europe Class A Class B Class C
(in millions, except per share data)
Balance as of September 30, 2018 2
3
1,768
245
12
$ 5,470
$ (7 ) $ 16,678
$ 11,318
$ 547
$ 34,006
Net income 9,055
9,055
Other comprehensive income (loss), net of tax (444 ) (444 )
Comprehensive income 8,611
Adoption of new accounting standards (Note 1) 385
7
392
VE territory covered losses incurred (Note 4) (170 ) (170 )
Recovery through conversion rate adjustment (Note 4 and Note 9) (8 ) 8
—
Conversion of class C common stock upon sales into public market 1
0
⁽¹⁾
—
Vesting of restricted stock and performance-based shares 3
—
Share-based compensation, net of forfeitures (Note 11) 321
321
Restricted stock and performance-based shares settled in cash for taxes (1 ) (106 ) (106 )
Cash proceeds from issuance of common stock under employee equity plans 2
127
127
Cash dividends declared and paid, at a quarterly amount of $0.25 per Class A share (Note 9) (1,706 ) (1,706 )
Repurchase of class A common stock (Note 9) (44 ) (468 ) (6,012 ) (6,480 )
Balance as of June 30, 2019 2
3
1,729
245
12
$ 5,462
$ (169 ) $ 16,552
$ 13,040
$ 110
$ 34,995

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


⁽¹⁾	~~Decrease is less than one million shares.~~

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

Table of Contents

VISA INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

(UNAUDITED)


	Three Months Ended June 30, 2019
	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, 2019	2	3	1,741		245	12		$	5,464	$	(163)	$	16,547	$	12,513	$	(86)	$	34,275
Net income														3,101				3,101
Other comprehensive income (loss), net of tax																196		196
Comprehensive income																		3,297

VE territory covered losses incurred (Note 5)										(8)								(8)
Recovery through conversion rate adjustment (Note 5 and 10)								(2)		2								0
Conversion of class C common stock upon sales into public market			0	⁽¹⁾		0	⁽¹⁾											—
Vesting of restricted stock and performance-based shares			0	⁽¹⁾														—
Share-based compensation, net of forfeitures (Note 12)												110						110
Restricted stock and performance-based shares settled in cash for taxes			0	⁽¹⁾								(3)						(3)
Cash proceeds from issuance of common stock under employee equity plans			1									38						38
Cash dividends declared and paid, at a quarterly amount of $0.25 per class A common stock (Note 10)														(565)				(565)
Repurchase of class A common stock (Note 10)			(13)									(140)		(2,009)				(2,149)
Balance as of June 30, 2019	2	3	1,729		245	12		$	5,462	$	(169)	$	16,552	$	13,040	$	110	$	34,995

Three Months Ended June 30, 2018
Preferred Stock Common Stock Preferred Stock Right to Recover for Covered Losses
Additional
Paid-In Capital

Accumulated
Income
Accumulated
Other
Comprehensive
Income Total
Equity
UK&I Europe Class A Class B Class C
(in millions, except per share data)
Balance as of March 31, 2018 2
3
1,790
245
12
$ 5,476
$ (6 ) $ 16,713
$ 10,192
$ 1,728
$ 34,103
Net income 2,329
2,329
Other comprehensive income (loss), net of tax (987 ) (987 )
Comprehensive income 1,342
VE territory covered losses incurred (Note 4) (5 ) (5 )
Recovery through conversion rate adjustment (Note 4 and Note 9) (6 ) 6
—
Conversion of class C common stock upon sales into public market 1
0
⁽¹⁾
—
Vesting of restricted stock and performance-based shares 0
⁽¹⁾
—
Share-based compensation, net of forfeitures (Note 11) 0
⁽¹⁾
89
89
Restricted stock and performance-based shares settled in cash for taxes 0
⁽¹⁾
(2 ) (2 )
Cash proceeds from issuance of common stock under employee equity plans 1
32
32
Cash dividends declared and paid, at a quarterly amount of $0.210 per Class A share (Note 9) (487 ) (487 )
Repurchase of class A common stock (Note 9) (14 ) (146 ) (1,608 ) (1,754 )
Balance as of June 30, 2018 2
3
1,778
245
12
$ 5,470
$ (5 ) $ 16,686
$ 10,426
$ 741
$ 33,318

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

⁽¹⁾

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

Table of Contents

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)


	Nine Months Ended June 30, 2019
	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, 2018	2	3	1,768	245	12		$	5,470	$	(7)	$	16,678	$	11,318	$	547	$	34,006
Net income													9,055				9,055
Other comprehensive income (loss), net of tax															(444)		(444)
Comprehensive income																	8,611
Adoption of new accounting standards (Note 1)													385		7		392
VE territory covered losses incurred (Note 5)									(170)								(170)
Recovery through conversion rate adjustment (Note 5 and 10)							(8)		8								—
Conversion of class C common stock upon sales into public market			1		0	⁽¹⁾											—
Vesting of restricted stock and performance-based shares			3														—
Share-based compensation, net of forfeitures (Note 12)											321						321
Restricted stock and performance-based shares settled in cash for taxes			(1)								(106)						(106)
Cash proceeds from issuance of common stock under employee equity plans			2								127						127
Cash dividends declared and paid, at a quarterly amount of $0.25 per class A common stock (Note 10)													(1,706)				(1,706)
Repurchase of class A common stock (Note 10)			(44)								(468)		(6,012)				(6,480)
Balance as of June 30, 2019	2	3	1,729	245	12		$	5,462	$	(169)	$	16,552	$	13,040	$	110	$	34,995

Nine Months Ended June 30, 2018
Preferred Stock Common Stock Preferred Stock Right to Recover for Covered Losses
Additional
Paid-In Capital

Accumulated
Income
Accumulated
Other
Comprehensive
Income Total
Equity
UK&I Europe Class A Class B Class C
(in millions, except per share data)
Balance as of September 30, 2017 2
3
1,818
245
13
$ 5,526
$ (52 ) $ 16,900
$ 9,508
$ 878
$ 32,760
Net income 7,456
7,456
Other comprehensive income (loss), net of tax (137 ) (137 )
Comprehensive income 7,319
VE territory covered losses incurred (Note 4) (9 ) (9 )
Recovery through conversion rate adjustment (Note 4 and Note 9) (56 ) 56
—
Conversion of class C common stock upon sales into public market 3
(1 ) —
Vesting of restricted stock and performance-based shares 2
—
Share-based compensation, net of forfeitures (Note11) 0
⁽¹⁾
242
242
Restricted stock and performance-based shares settled in cash for taxes (1 ) (90 ) (90 )
Cash proceeds from issuance of common stock under employee equity plans 3
135
135
Cash dividends declared and paid, at a quarterly amount of $0.195 per Class A share in the first quarter and $0.210 per Class A share in the second and third quarters (Note 9) (1,435 ) (1,435 )
Repurchase of class A common stock (Note 9) (47 ) (501 ) (5,103 ) (5,604 )
Balance as of June 30, 2018 2
3
1,778
245
12
$ 5,470
$ (5 ) $ 16,686
$ 10,426
$ 741
$ 33,318

⁽¹⁾

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

Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

Note 1—Summary of Significant Accounting Policies

Organization. Visa Inc. (“Visa” or the “Company”) is a global payments technology company that enables fast, 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 ~~retail~~ electronic payments networks — VisaNet — which facilitates authorization, clearing and settlement of payment transactions and enables the Company to provide its financial institution and merchant clients a wide range of products, platforms and value-added services. ~~VisaNet also offers fraud protection for account holders and assured payment for merchants.~~ Visa is not a ~~bank~~financial institution and does not issue cards, extend credit or set rates and fees for account holders on 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)~~(“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, ~~2018~~2019 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 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 consolidated financial statements in the period in which such changes occur. Future actual results could differ materially from these estimates. The worldwide spread of coronavirus (“COVID-19”) has created significant uncertainty in the global economy. There have been no comparable recent events that provide guidance as to the effect the spread of 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 Issued and Adopted Accounting Pronouncements.

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of goods or services to customers. This new revenue standard replaces all existing revenue recognition guidance in U.S. GAAP. Subsequently, the FASB also issued a series of amendments to the new revenue standard. The new revenue standard changes the classification and timing of recognition of certain client incentives and marketing-related funds paid to customers, as well as revenues and expenses for market development funds and services provided to customers as an incentive. The Company adopted the standard effective October 1, 2018 using the modified retrospective transition method applied to the aggregate of all modifications for contracts not completed as of October 1, 2018. Results for reporting periods beginning after October 1, 2018 are presented under the new revenue standard. The comparative prior period amounts appearing on the financial statements have not been restated and continue to be reported under the prior revenue standard. See ~~Note 2—Revenues~~ ~~for the impact of the new revenue standard on the accompanying unaudited consolidated financial statements as of and for the three and nine months ended June 30, 2019.~~

~~Table of Contents~~

~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

The following table summarizes the cumulative transition adjustments for the adoption of the new revenue standard recorded on the October 1, 2018 consolidated balance sheet to reflect the aggregate impact to all contracts not completed as of October 1, 2018:

Fiscal Year 2018 Closing Balance Sheet Cumulative Transition Adjustment for New Revenue Standard Fiscal Year 2019 Opening Balance Sheet
(in millions)
Assets
Current portion of client incentives $ 340
$ 199
$ 539
Client incentives 538
614
1,152
Liabilities
Client incentives 2,834
241
3,075
Accrued liabilities 1,160
6
1,166
Deferred tax liabilities 4,618
108
4,726
Other liabilities 2,666
58
2,724
Equity
Accumulated income 11,318
400
11,718

In January 2016, the FASB issued ASU 2016-01, which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including the requirement to measure certain equity investments at fair value with changes in fair value recognized in net income. The Company adopted the standard effective October 1, 2018, using the modified retrospective transition method for marketable equity securities and the prospective method for non-marketable equity securities. The Company has elected to use the measurement alternative for non-marketable equity securities, defined as cost adjusted for changes from observable transactions for identical or similar investments of the same issuer, less impairment. The adoption did not have a material impact on the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, which requires the recognition of lease assets and lease liabilities arising from operating leases on the balance sheet. Subsequently, the FASB also issued a series of amendments to this new ~~lease~~leases standard that address the transition methods available and clarify the guidance for lessor costs and other aspects of the new ~~lease~~leases standard. The Company ~~will adopt~~adopted the standard effective October 1, 2019 ~~and expects to adopt~~ using the modified retrospective transition method ~~without restating~~with comparative ~~periods.~~periods continuing to be reported using the prior leases standard. The Company elected to apply the package of practical expedients permitted under the transition guidance, allowing the Company to carry forward the historical assessment of whether a contract was or

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

contains a lease, lease classification and capitalization of initial direct costs. The adoption did not have a material impact on the consolidated financial statements.

In accordance with ASU 2016-02, the Company determines if an arrangement is a lease at its inception. Right-of-use (“ROU”) assets, and corresponding lease liabilities, are recognized at the commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As a majority of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company does not record a ROU asset and corresponding liability for leases with terms of 12 months or less.

The Company does not include renewals in the determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. Lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. The Company does not combine lease payments with non-lease components for any of its leases. Operating leases are recorded as ROU assets, which are included in other assets. The current portion of lease liabilities are included in accrued liabilities and the long-term portion is included in other liabilities on the consolidated balance sheet. The Company’s lease cost consists of amounts recognized under lease agreements in the results of operations adjusted for impairment and sublease income.

In February 2018, the FASB issued ASU 2018-02, which allows a reclassification from accumulated other comprehensive income to retained earnings for adjustments to tax effects that were originally recorded in other comprehensive income due to changes in the U.S. federal corporate income tax rate resulting from the enactment of the U.S. tax reform legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Company adopted the ASU effective October 1, 2019. The adoption did not have a material impact on the consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in the existing guidance for income taxes and making other minor improvements. The amendments in the ASU are effective for the Company on October 1, 2021. The Company does not plan to early adopt the ASU at this time. The adoption is not expected to have a material impact on the consolidated financial statements.

In ~~October 2016,~~January 2020, the FASB issued ASU ~~2016-16,~~2020-01, which ~~requires~~clarifies that ~~entities recognize~~an entity should consider observable transactions that require it to either apply or discontinue the ~~income tax consequences~~equity method of ~~an intra-entity transfer~~accounting for the purposes of ~~an asset, other than inventory, when~~applying the ~~transfer occurs.~~fair value measurement alternative. The amendments in the ASU are effective for the Company ~~adopted the standard effective~~on October 1, ~~2018.~~2021. The adoption ~~did~~is not expected to have a material impact on the consolidated financial statements.

In ~~November 2016,~~March 2020, the FASB issued ASU ~~2016-18,~~2020-04, which ~~requires~~provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate or another reference rate expected to be discontinued because of reference rate reform. The amendments in the ASU are effective for the Company upon issuance through December 31, 2022. The Company is evaluating the effect ASU 2020-04 will have on its consolidated financial statements.

Note 2—Acquisitions

Pending Acquisition. On January 13, 2020, the Company entered into a ~~statement~~definitive agreement to acquire Plaid, Inc. for $5.3 billion. The Company will pay approximately $4.9 billion of cash ~~flows includes~~and $0.4 billion of retention equity and deferred equity consideration. This acquisition is subject to customary closing conditions, including ongoing regulatory reviews and approvals, which are expected to be completed by the ~~total~~end of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents when reconciling the beginning-of-period and end-of-period total amounts. The Company adopted the standard effective October 1, 2018. The adoption impacted the presentation of transactions related to the U.S. litigation escrow account and customer collateral on the consolidated statements of cash flows. The prior period statement of cash flows have been retrospectively adjusted to reflect the impact of this ASU, which had no impact on the Company’s balance sheets, statements of operations or statements of comprehensive income for any period.2020.

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL ~~STATEMENTS—~~STATEMENTS (UNAUDITED)—(Continued)

In March 2017, the FASB issued ASU 2017-07, which requires that the service cost component of net periodic pension and postretirement benefit cost be presented in the same line item as other employee compensation costs, while the other components be presented separately as non-operating income (expense). In addition, only the service cost component is eligible for capitalization, when applicable. Retrospective application is required for the change in income statement presentation while the change in capitalized benefit cost is required to be applied prospectively. The Company adopted the standard effective October 1, 2018, which did not have a material impact on the consolidated financial statements. The service cost component of net periodic pension and postretirement benefit cost is presented in personnel expenses while the other components are presented in other non-operating expense on the Company’s consolidated statement of operations. The Company did not apply the standard retrospectively for the change in income statement presentation as the impact would have been immaterial.

In May 2017, the FASB issued ASU 2017-09, which amends the scope of modification accounting for share-based payment arrangements. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The Company adopted the standard effective October 1, 2018. The adoption did not have a material impact on the consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, which improves the financial reporting of hedging instruments to better portray the economic results of an entity’s risk management activities in its financial statements. Visa early adopted the standard effective January 1, 2019, which did not have a material impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The Company adopted the standard effective October 1, 2018. The adoption did not have a material impact on the consolidated financial statements.

Note 2—3—Revenues

~~Impact of the New Revenue Standard~~

The following tables summarize the impact of the new revenue standard on the Company’s consolidated statement of operations for the three and nine months ended June 30, 2019 and the consolidated balance sheet as of June 30, 2019:

For the Three Months Ended
June 30, 2019

For the Nine Months Ended
June 30, 2019
As Reported Impact of the New Revenue Standard Results Under Prior Revenue Standard As Reported Impact of the New Revenue Standard Results Under Prior Revenue Standard
(in millions)
Net revenues $ 5,840
$ (88 ) $ 5,752
$ 16,840
$ (179 ) $ 16,661

Operating Expenses
Marketing 282
(31 ) 251
799
(100 ) 699
Professional fees 113
(5 ) 108
305
(12 ) 293
General and administrative 315
(11 ) 304
855
(21 ) 834
Total operating expenses 1,932
(47 ) 1,885
5,574
(133 ) 5,441
Operating income 3,908
(41 ) 3,867
11,266
(46 ) 11,220

Income before income taxes 3,866
(41 ) 3,825
11,173
(46 ) 11,127
Income tax provision 765
(8 ) 757
2,118
(6 ) 2,112
Net income 3,101
(33 ) 3,068
9,055
(40 ) 9,015

~~Table of Contents~~

~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

June 30, 2019
As Reported Impact of the New Revenue Standard Results Under Prior Revenue Standard
(in millions)
Assets
Current portion of client incentives $ 690
$ (282 ) $ 408
Client incentives 1,854
(811 ) 1,043
Liabilities
Accounts payable 150
26
176
Client incentives 3,690
(439 ) 3,251
Accrued liabilities 1,358
(18 ) 1,340
Deferred tax liabilities 4,930
(112 ) 4,818
Other liabilities 2,801
(110 ) 2,691
Equity
Accumulated income 13,040
(440 ) 12,600

~~Disaggregation of Revenues~~

The nature, amount, timing and uncertainty of the Company’s revenues 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 revenues by revenue category and by geography for the three and nine months endedJune 30, ~~2019~~2020 and ~~2018:~~2019:


	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019
	(in millions)
Service revenues	$	2,409	$	2,405	$	7,587	$	7,164
Data processing revenues	2,525		2,662		8,100		7,564
International transaction revenues	1,102		1,977		4,953		5,624
Other revenues	314		342		1,071		968
Client incentives	(1,513)		(1,546)		(4,966)		(4,480)
Net revenues	$	4,837	$	5,840	$	16,745	$	16,840

Three Months Ended
June 30, Nine Months Ended
June 30,
2019 2018 2019 2018
(in millions)
U.S. $ 2,587
$ 2,334
$ 7,573
$ 6,896
International 3,253
2,906
9,267
8,279
Net revenues $ 5,840
$ 5,240
$ 16,840
$ 15,175

~~Revenue recognition.~~ The Company's net revenues are comprised principally of the following categories: service revenues, data processing revenues, international transaction revenues, and other revenues, reduced by costs incurred under client incentives arrangements. As a payment network service provider, the Company’s obligation to the customer is to stand ready to provide continuous access to our payment network over the contractual term. Consideration is variable based primarily upon the amount and type of transactions and payments volume on Visa’s products. The Company recognizes revenues, net of sales and other similar taxes, as the payment network services are performed. Fixed fees for payment network services are generally recognized ratably over the related service period. The Company has elected the optional exemption to not disclose the remaining performance obligations related to payment network services.


	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019
	(in millions)
U.S.	$	2,380	$	2,587	$	7,747	$	7,573
International	2,457		3,253		8,998		9,267
Net revenues	$	4,837	$	5,840	$	16,745	$	16,840

~~Table of Contents~~

~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Service revenues~~ consist of revenues earned for services provided in support of client usage of Visa products. Current quarter service revenues are primarily assessed using a calculation of current pricing applied to the prior quarter's payments volume. The Company also earns revenues from assessments designed to support ongoing acceptance and volume growth initiatives, which are recognized in the same period the related volume is transacted.

~~Data processing revenues~~ consist of revenues earned for authorization, clearing, settlement, network access and other maintenance and support services that facilitate transaction and information processing among the Company's clients globally. Data processing revenues are recognized in the same period the related transactions occur or services are performed.

~~International transaction revenues~~ are earned for cross-border transaction processing and currency conversion activities. Cross-border transactions arise when the country of origin of the issuer is different from that of the merchant. International transaction revenues are primarily generated by cross-border payments and cash volume.

~~Other revenues~~ consist mainly of license fees for use of the Visa brand, fees for account holder services, licensing and certification and other activities related to the Company's acquired entities. Other revenues also include optional services or product enhancements, such as extended account holder protection and concierge services. Other revenues are recognized in the same period the related transactions occur or services are performed.

~~Client incentives.~~ The Company enters into long-term contracts with financial institution clients, merchants and strategic partners for various programs designed to increase revenues recognized by growing payments volume, increasing Visa product acceptance, winning merchant routing transactions over to Visa's network and driving innovation. These incentives are primarily accounted for as reductions to revenues or as operating expenses if the payment is in exchange for a distinct good or service provided by the customer. The Company generally capitalizes upfront and fixed incentive payments under these agreements and amortizes the amounts as a reduction to revenues ratably over the contractual term. Incentives that are earned by the customer based on performance targets are recorded as reductions to revenues based on management's estimate of each client's future performance. These accruals are regularly reviewed and estimates of performance are adjusted, as appropriate, based on changes in performance expectations, actual client performance, amendments to existing contracts or the execution of new contracts.

Note 3—4—Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents

The Company’s cash and cash equivalents include cash and certain highly liquid investments with original maturities of 90 days or less from the date of purchase. Cash equivalents are primarily recorded at cost, which approximates fair value due to their generally short maturities. The Company defines restricted cash and restricted cash equivalents as cash and cash equivalents that cannot be withdrawn or used for general operating activities.

The Company reconciles cash, cash equivalents, restricted cash and restricted cash equivalents reported in the consolidated balance sheets that aggregate to the beginning and ending balances shown in the consolidated statements of cash flows as follows:

June 30, September 30,
2019 2018 2018 2017
(in millions)
Cash and cash equivalents $ 7,912
$ 8,505
$ 8,162
$ 9,874
Restricted cash and restricted cash equivalents:
U.S. litigation escrow 902
1,487
1,491
1,031
Customer collateral 1,668
1,346
1,324
1,106
Prepaid expenses and other current assets 187
0
0
0
Cash, cash equivalents, restricted cash and restricted cash equivalents $ 10,669
$ 11,338
$ 10,977
$ 12,011



	June 30, 2020		September 30, 2019
	(in millions)
Cash and cash equivalents	$	13,898	$	7,838
Restricted cash and restricted cash equivalents:
U.S. litigation escrow	1,148		1,205
Customer collateral	1,759		1,648
Prepaid expenses and other current assets	129		141
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	16,934	$	10,832

~~Table of Contents~~

~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Note 4—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 referred to as the “U.S. covered litigation” are paid. The escrow funds are held in money market investments along with interest income earned, less applicable taxes, and are classified as restricted cash equivalents on the consolidated balance sheets. ~~The balance~~

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

On December 13, 2019, the ~~escrow account~~district court entered the final judgment order approving the Amended Settlement Agreement with the Damages Class plaintiffs in the Interchange Multidistrict Litigation proceedings. A takedown payment of approximately $467 million was ~~$902 million at June 30,~~received on December 27, 2019, and ~~$1.5 billionat September 30, 2018.~~deposited into the Company’s litigation escrow account. The ~~Company paid $600 million from~~deposit into the litigation escrow account and reestablishment of a prior accrual to address opt-out claims was recorded during the nine months ended June 30, ~~2019. See~~ ~~Note 13—Legal Matters~~.

2020. The accrual related to the U.S. covered litigation could be either higher or lower than the litigation escrow account balance. ~~The Company did not record an additional accrual for the U.S. covered litigation during the nine months ended June 30, 2019.~~ See Note ~~13—~~14—Legal Matters.

The following table sets forth the changes in the restricted cash equivalents—U.S. litigation escrow account:


	Nine Months Ended June 30,
	2020		2019
	(in millions)
Balance at beginning of period	$	1,205	$	1,491
Return of takedown payment to the litigation escrow account	467		0
Payments to class plaintiffs’ settlement fund⁽¹⁾	0		(600)
Payments to opt-out merchants⁽¹⁾ and interest earned on escrow funds	(524)		11
Balance at end of period	$	1,148	$	902

⁽¹⁾These payments are associated with the Interchange Multidistrict Litigation. See Note 14—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 (the “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 (the “VE territory covered losses”) through a periodic adjustment to the class A common stock conversion rates applicable to the UK&I and Europe preferred stock. VE territory covered losses are recorded in “right to recover for covered losses” within 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” as contra-equity is then recorded against the book value of the preferred stock within stockholders’ equity.

During the three and nine months ended June 30, ~~2019,~~2020, the Company recovered $2$164 million ~~and $8 million, respectively,~~ of VE territory covered losses through adjustments to the class A common stock conversion rates applicable to the UK&I and Europe preferred stock. The conversion rates applicable to the UK&I and Europe preferred stock were reduced from ~~12.955 and 13.888, respectively, as of September 30, 2018 to~~ 12.936 and 13.884, respectively, as of September 30, 2019 to 12.775 and 13.722, respectively, as of June 30, ~~2019.~~2020.

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

The following table sets forth the activities related to VE territory covered losses in preferred stock and “right to recover for covered losses” within equity during the nine months ended June 30, ~~2019.~~ 2020.

VE territory covered losses incurred⁽¹⁾

Recovery through conversion rate adjustment⁽²⁾

⁽¹⁾VE territory covered losses incurred reflect settlements with merchants and additional legal costs. See Note ~~13—~~14—Legal Matters.

Preferred Stock Right to Recover for Covered Losses
UK&I Europe
(in millions)
Balance as of September 30, 2018 $ 2,291
$ 3,179
$ (7 )
VE territory covered losses incurred 0
0
(170 )
Recovery through conversion rate adjustment (6 ) (2 ) 8
Balance as of June 30, 2019 $ 2,285
$ 3,177
$ (169 )

⁽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.

~~Table of Contents~~

~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

The following table⁽¹⁾ sets forth the as-converted value of the preferred stock available to recover VE territory covered losses compared to the book value of preferred shares recorded in stockholders’ equity within the Company’s consolidated balance sheets as of June 30, ~~2019~~2020 and September 30, ~~2018:~~2019:

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⁾

⁽¹⁾Figures in the table may not recalculate exactly due to rounding. As-converted and book values are based on unrounded numbers.

⁽²⁾The as-converted value of preferred stock is calculated as the product of: (a) 2 million and 3 million shares of the UK&I and Europe preferred stock outstanding, respectively, as of June 30, 2020; (b) 12.775 and 13.722, the class A common stock conversion rate applicable to the UK&I and Europe preferred stock as of June 30, 2020, respectively; and (c) $193.17, Visa’s class A common stock closing stock price as of June 30, 2020.

⁽³⁾The as-converted value of preferred stock is calculated as the product of: (a) 2 million and 3 million shares of the UK&I and Europe preferred stock outstanding, respectively, as of September 30, 2019; (b) 12.936 and 13.884, the class A common stock conversion rate applicable to the UK&I and Europe preferred stock as of September 30, 2019, respectively; and (c) $172.01, Visa’s class A common stock closing stock price as of September 30, 2019.

June 30, 2019 September 30, 2018

As-Converted Value of Preferred Stock⁽²⁾
Book Value of Preferred Stock
As-Converted Value of Preferred Stock⁽³⁾
Book Value of Preferred Stock
(in millions)
UK&I preferred stock $ 5,569
$ 2,285
$ 4,823
$ 2,291
Europe preferred stock 7,606
3,177
6,580
3,179
Total 13,175
5,462
11,403
5,470
Less: right to recover for covered losses (169 ) (169 ) (7 ) (7 )
Total recovery for covered losses available $ 13,006
$ 5,293
$ 11,396
$ 5,463

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Note 5—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,
2019 September 30,
2018 June 30,
2019 September 30,
2018
(in millions)
Assets
Cash equivalents and restricted cash equivalents:
Money market funds $ 6,275
$ 6,252

U.S. government-sponsored debt securities $ 50
$ 1,048
Investment securities:
Marketable equity securities 125
113

U.S. government-sponsored debt securities 5,484
5,008
U.S. Treasury securities 574
2,508

Other current and non-current assets:
Derivative instruments 211
78
Total $ 6,974
$ 8,873
$ 5,745
$ 6,134
Liabilities
Accrued and other liabilities:
Derivative instruments $ 74
$ 22
Total $ 0
$ 0
$ 74
$ 22

There were 0 transfers between Level 1 and Level 2 assets during the nine months ended June 30, ~~2019.~~2020.

Level 1 assets. Money market funds, ~~publicly-traded~~marketable equity securities and U.S. Treasury securities are classified as Level 1 within the fair value hierarchy, as fair value is based on quoted prices in active markets. The Company’s deferred compensation liability is measured at fair value based on marketable equity securities held under the deferred compensation plan.

~~Table of Contents~~

~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

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. The pricing data obtained from outside sources is reviewed internally for reasonableness, compared against benchmark quotes from independent pricing sources, then confirmed or revised accordingly. Derivative instruments are valued using inputs that are observable in the market or can be derived principally from or corroborated by observable market data. There were no substantive changes to the valuation techniques and related inputs used to measure fair value during the nine months ended June 30, ~~2019.~~

~~Marketable equity securities.~~ Marketable equity securities are publicly traded and measured at fair value within Level 1 of the fair value hierarchy, as fair value is based on quoted prices in active markets. On October 1, 2018, the Company adopted ASU 2016-01 which changed the Company’s accounting for marketable equity securities. Beginning on October 1, 2018, unrealized gains and losses from changes in fair value of marketable equity securities are recognized in non-operating income (expense).2020.

U.S. government-sponsored debt securities and U.S. Treasury securities. The Company considers U.S. government-sponsored debt securities and U.S. Treasury securities to be available-for-sale and held ~~$6.1~~$3.1 billion and ~~$7.5~~$6.3 billion of these investment securities as of June 30, ~~2019~~2020 and September 30, ~~2018,~~2019, respectively. All of the Company’s long-term available-for-sale investment securities are due within one to five years.

Assets Measured at Fair Value on a Non-recurring Basis

Non-marketable equity securities. The Company’s non-marketable equity securities are investments in privately held companies without readily determinable market values. These investments are classified as Level 3 due to the absence of quoted market prices, the inherent lack of liquidity and the fact that inputs used to measure fair value are unobservable and require management’s judgment. On October 1, 2018, the Company adopted ASU 2016-01 which changed the Company’s accounting for non-marketable equity securities. Beginning on October 1, 2018, the Company’s policy is to adjust the carrying value of its non-marketable equity securities to fair value when transactions for identical or similar investments of the same issuer are observable in the market. All gains and losses on non-marketable equity securities, realized and unrealized, are recognized in non-operating income (expense).

~~Non-marketable equity securities totaled $679 million and $137 million at June 30, 2019 and September 30, 2018, respectively, and are classified in other assets on the consolidated balance sheets.~~ During the three and nine months ended June 30, ~~2019,~~2020, $56 million and $65 million, respectively, of upward adjustments ~~of $14 million and $80 million, respectively,~~ were ~~made to~~included in the carrying value of non-marketable equity ~~securities, and~~securities. NaN material downward adjustments ~~of $6 million~~ were ~~made~~included during the same periods. During the three and nine months ended June 30, ~~2019 and 2018, there were~~2020, $6 million in impairment was recognized. There was no ~~significant impairments~~impairment recognized during the same prior-year comparable periods. The following table summarizes the total carrying value of the Company’s non-marketable equity ~~securities.~~securities held as of June 30, 2020 including cumulative unrealized gains and losses:


	June 30, 2020
	(in millions)
Initial cost basis	$	834
Upward adjustments	175
Downward adjustments (including impairment)	(11)
Carrying amount, end of period	$	998

Non-financial assets and liabilities. Long-lived assets such as goodwill, indefinite-lived intangible assets, finite-lived intangible assets and property, equipment and technology are considered non-financial assets. The Company does not have any non-financial liabilities measured at fair value on a non-recurring basis. Finite-lived intangible assets primarily consist of customer relationships and trade names, ~~and reseller relationships,~~ all of which were obtained through acquisitions.

If the Company were required to perform a quantitative assessment for impairment testing of goodwill and indefinite-lived intangible assets, the fair values would generally be estimated using an income approach. As the assumptions employed to measure these assets on a non-recurring basis are based on management’s judgment using internal and external data, these fair value determinations are classified as Level 3 in the fair value hierarchy. The

~~Table of Contents~~

~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Company completed its annual impairment review of its indefinite-lived intangible assets and goodwill as of February 1, ~~2019,~~2020, and concluded that there was no0 impairment. No recent events or changes in circumstances indicate that impairment existed at June 30, ~~2019.~~2020.

Gains and Losses on Marketable and Non-marketable Equity Securities

~~The Company recognized net realized gains of $1 million~~Gains and ~~$16 millionfor~~losses on the ~~three and nine months ended June 30, 2019, respectively, on its~~Company’s equity securities sold during the periods. The Company recognized net unrealized gains of $10 million and $69 million for the three and nine months ended June 30, 2019, respectively, on equity securities held as of the end of the periods.are summarized below.


	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019
	(in millions)
Net gain (loss) on equity securities sold during the period	$	0	$	1	$	5	$	16
Unrealized gain (loss) on equity securities held as of the end of the period	68		10		59		69
Total gain (loss) recognized in non-operating income (expense), net	$	68	$	11	$	64	$	85

Other Fair Value Disclosures

Long-term 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. The pricing data obtained from outside sources is reviewed internally for reasonableness, compared against benchmark quotes from independent pricing sources, then confirmed or revised accordingly. If measured at fair value in the financial statements, these instruments would be classified as Level 2 in the fair value hierarchy. The carrying value and estimated fair value of long-term debt was ~~$16.7~~$20.9 billion and ~~$18.0~~$23.4 billion, respectively, as of June 30, ~~2019.~~2020. The carrying value and estimated fair value of long-term debt ~~were both $16.6~~was $16.7 billion and $18.4 billion, respectively, as of September 30, ~~2018.~~2019.

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Other financial instruments not measured at fair value. The following financial instruments are not measured at fair value on the Company’s unaudited consolidated balance sheet at June 30, ~~2019,~~2020, but disclosure of their fair values is required: ~~time deposits recorded in prepaid expenses and other current assets,~~ settlement receivable and payable, accounts receivable and customer collateral. The estimated fair value of such instruments at June 30, ~~2019~~2020 approximates their carrying 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.

Note ~~6—Debt~~7—Leases

The Company entered into various operating lease agreements primarily for real estate. The Company's leases have original lease periods expiring between fiscal 2020 and 2030. Many leases include 1 or more options to renew. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Payments under the Company’s lease arrangements are generally fixed. At June 30, 2020, the Company had no finance leases.

During the three and nine months ended June 30, 2020, total operating lease cost was $29 million and $84 million, respectively. At June 30, 2020, the weighted average remaining lease term for operating leases was approximately 7 years and the weighted average discount rate for operating leases was 2.28%.

At June 30, 2020, the present value of future minimum lease payments was as follows:


	June 30, 2020
	(in millions)
Remainder of 2020	$	29
2021	107
2022	100
2023	93
2024	80
Thereafter	226
Total undiscounted lease payments	635
Less: imputed interest	(52)
Present value of lease liabilities	$	583

At June 30, 2020, the Company had additional operating leases that had not yet commenced with lease obligations of $465 million. These operating leases will commence between fiscal 2020 and 2023 with non-cancellable lease terms of 1 to 15 years.

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

The Company had outstanding debt as follows:

Effective Interest Rate⁽¹⁾

Hedge accounting fair value adjustments⁽²⁾

June 30, 2019 September 30, 2018 Effective Interest Rate
(in millions, except percentages)
2.20% Senior Notes due December 2020 $ 3,000
$ 3,000
2.30 %
2.15% Senior Notes due September 2022 1,000
1,000
2.30 %
2.80% Senior Notes due December 2022 2,250
2,250
2.89 %
3.15% Senior Notes due December 2025 4,000
4,000
3.26 %
2.75% Senior Notes due September 2027 750
750
2.91 %
4.15% Senior Notes due December 2035 1,500
1,500
4.23 %
4.30% Senior Notes due December 2045 3,500
3,500
4.37 %
3.65% Senior Notes due September 2047 750
750
3.73 %
Total senior notes 16,750
16,750

Unamortized discounts and debt issuance costs (111 ) (120 )
Hedge accounting fair value adjustments 55
0

Total long-term debt $ 16,694
$ 16,630

⁽²⁾Represents the change in fair value of interest rate swap agreements entered into on a portion of certain outstanding senior notes.

Commercial Paper Program

Visa maintains a commercial paper program to support its working capital requirements and for other general corporate purposes. Under the program, the Company is authorized to issue up to $3.0 billion in outstanding notes, with maturities up to 397 days from the date of issuance. During the three months ended June 30, 2020, the Company repaid $1.0 billion of commercial paper that was issued during the three months ended March 31, 2020. The Company had 0 outstanding obligations under the program at June 30, 2020 and September 30, 2019.

In April 2020, the Company issued fixed-rate senior notes in a public offering for an aggregate principal amount of $4.0 billion, with maturities ranging between 7 and 20 years. The April 2027 Notes, 2030 Notes and 2040 Notes, or collectively, the "2020 Notes", have interest rates of 1.90%, 2.05% and 2.70%, respectively. Interest on the 2020 Notes is payable semi-annually on April 15 and October 15 of each year, commencing October 15, 2020. The net aggregate proceeds, after deducting discounts and debt issuance costs, were approximately $4.0 billion. The Company plans to use the net proceeds for general corporate purposes.

The 2020 Notes are senior unsecured obligations of the Company, ranking equally with the Company's other senior unsecured indebtedness. The Company may redeem the 2020 Notes as a whole or in part at any time and from time to time at specified redemption prices.

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL ~~STATEMENTS—~~STATEMENTS (UNAUDITED)—(Continued)

~~The Company recognized interest expense for its senior notes of $106 million and $137 million for the three months ended June 30, 2019 and 2018, respectively, and$350 million and $413 million for the nine months ended June 30, 2019 and 2018, respectively. Interest expense for the three and nine months ended June 30, 2019 includes adjustments related to~~Future principal payments on the Company’s hedging program. Effective interest rates disclosed in the table above do not reflect hedge accounting adjustments. Hedge accounting adjustments impacting the carrying value of the Company’s long-termoutstanding debt are a result of gains or losses related to fair value hedges. These gains or losses are recognized in earnings, along with a corresponding gain or loss related to the change in value of the underlying hedged item, within non-operating income (expense) in the Company’s consolidated statement of operations. See as follows:


	For the Years Ending September 30,
	2020		2021		2022		2023		2024		Thereafter		Total
	(in millions)
Future principal payments	$	0	$	3,000	$	1,000	$	2,250	$	0	$	14,500	$	20,750

Note ~~5—Fair Value Measurements and Investments~~ ~~for a description of the Company’s accounting treatment for fair value hedges.~~

~~Credit facility.~~ On July 25, 2019, the Company entered into an amended and restated credit agreement for a 5 year, unsecured $5.0 billion revolving credit facility (the "Credit Facility"), which will expire on July 25, 2024. The Credit Facility is no longer governed by any financial covenants. This facility is maintained to ensure the integrity of the payment card settlement process and for general corporate purposes. Interest on borrowings under the Credit Facility will be charged at the London Interbank Offered Rate or an alternative base rate, in each case plus applicable margins that fluctuate based on the applicable credit rating of the Company's senior unsecured long-term debt.

~~Note 7—~~9—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.

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. The Company’s maximum daily settlement exposure was ~~$92.0~~$97.3 billion and the average daily settlement exposure was ~~$56.4~~$54.4 billion during the nine months ended June 30, ~~2019~~.2020.

The Company maintains and regularly reviews global settlement risk policies and procedures to manage settlement exposure, which may require clients to post collateral if certain credit standards are not met. At June 30, ~~2019~~2020 and September 30, ~~2018,~~2019, the Company held collateral as follows:

June 30,
2019 September 30,
2018
(in millions)
Cash equivalents $ 1,668
$ 1,708
Pledged securities at market value 294
192
Letters of credit 1,447
1,382
Guarantees 582
860
Total $ 3,991
$ 4,142

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL ~~STATEMENTS—~~STATEMENTS (UNAUDITED)—(Continued)

~~Note 8—Pension and Other Postretirement Benefits~~

The Company sponsors various qualified and non-qualified defined benefit pension and other postretirement benefit plans that provide for retirement and medical benefits for all eligible employees residing in the United States. The Company also sponsors other pension benefit plans that provide benefits for internationally-based employees at certain non-U.S. locations. The components of net periodic benefit cost presented below include the U.S. pension plans and the non-U.S. pension plans, comprising only the Visa Europe plans. Disclosures relating to other U.S. postretirement benefit plans and other non-U.S. pension benefit plans are not included as they are immaterial, individually and in aggregate.

Pension Benefits
U.S. Plans Non-U.S. Plans
Three Months Ended
June 30, Three Months Ended
June 30,
2019 2018 2019 2018
(in millions)
Service cost $ 0
$ 0
$ 1
$ 1
Interest cost 8
8
3
3
Expected return on plan assets (17 ) (17 ) (5 ) (5 )
Settlement loss 2
3
0
0
Total net periodic benefit cost (income) $ (7 ) $ (6 ) $ (1 ) $ (1 )

Pension Benefits
U.S. Plans Non-U.S. Plans
Nine Months Ended
June 30, Nine Months Ended
June 30,
2019 2018 2019 2018
(in millions)
Service cost $ 0
$ 0
$ 3
$ 3
Interest cost 24
24
10
9
Expected return on plan assets (53 ) (52 ) (14 ) (15 )
Settlement loss 2
3
0
0
Total net periodic benefit cost (income) $ (27 ) $ (25 ) $ (1 ) $ (3 )

~~Table of Contents~~

~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Note 9—10—Stockholders’ Equity

As-converted class A common stock. The following table⁽¹⁾ presents the number of shares of each series and class of stock and the number of shares of class A common stock on an as-converted basis:


	June 30, 2020							September 30, 2019
	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 rates)
UK&I preferred stock	2	12.7750		32	2	12.9360		32
Europe preferred stock	3	13.7220		43	3	13.8840		44
Class A common stock⁽²⁾	1,687	—		1,687	1,718	—		1,718
Class B common stock	245	1.6228	⁽³⁾	398	245	1.6228	⁽³⁾	398
Class C common stock	11	4.0000		43	11	4.0000		45
Total				2,203				2,237

June 30, 2019 September 30, 2018

Shares
Outstanding

Conversion Rate Into
Class A
Common Stock

As-converted Class A
Common
Stock⁽²⁾

Shares
Outstanding

Conversion Rate Into
Class A
Common Stock

As-converted Class A
Common
Stock⁽²⁾

(in millions, except conversion rates)
UK&I preferred stock 2
12.9360
32
⁽³⁾
2
12.9550
32
⁽³⁾
Europe preferred stock 3
13.8840
44
⁽³⁾
3
13.8880
44
⁽³⁾
Class A common stock⁽⁴⁾
1,729
—
1,729
1,768
—
1,768

Class B common stock 245
1.6298
⁽⁵⁾
400
245
1.6298
⁽⁵⁾
400

Class C common stock 12
4.0000
46
12
4.0000
47

Total 2,251
2,291

⁽¹⁾
Figures in the table may not recalculate exactly due to rounding. As-converted class A common stock is calculated based on unrounded numbers.

⁽¹⁾

⁽²⁾Class A common stock shares outstanding reflect repurchases that settled on or before June 30, 2020 and September 30, 2019.

⁽³⁾The class B to class A common stock conversion rate is presented on a rounded basis. Conversion calculations for dividend payments are based on a conversion rate rounded to the tenth decimal.

Reduction in as-converted shares. Under the terms of the Europe retrospective responsibility plan, the Company is entitled to recover VE territory covered losses through periodic adjustments to the class A common stock conversion rates applicable to the UK&I and Europe preferred stock. The recovery has the same economic effect on earnings per share as repurchasing the Company’s class A common stock, because it reduces the UK&I and Europe preferred stock conversion rates and consequently, reduces the as-converted class A common stock share count.

The following table presents the reduction in equivalent number of as-converted shares of class A common stock, effective price per share and recovery of VE territory covered losses through conversion rate adjustments:

Effective price per share⁽²⁾

Nine Months Ended
June 30, 2019 Twelve Months Ended
September 30, 2018
Preferred Stock
UK&I Europe UK&I Europe
(in millions, except per share data)
Effective price per share⁽¹⁾
$ 141.32
$ 150.26
$ 113.05
$ 112.92
Recovery through conversion rate adjustment $ 6
$ 2
$ 35
$ 21
⁽¹⁾The reduction in equivalent number of shares of class A common stock was less than one million shares.

⁽¹⁾

⁽²⁾Effective price per share for the quarter 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 convertible participating preferred stock. Effective price per share is calculated using the weighted-average effective prices of the respective adjustments made during the year.

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL ~~STATEMENTS—~~STATEMENTS (UNAUDITED)—(Continued)

Common stock repurchases. The following table⁽¹⁾ presents share repurchases in the open market for the following periods:

Shares repurchased in the open market⁽¹⁾

Average repurchase price per share⁽²⁾

Three Months Ended
June 30, Nine Months Ended
June 30,
2019 2018 2019 2018
(in millions, except per share data)
Shares repurchased in the open market⁽²⁾
13
14
44
47
Average repurchase price per share⁽³⁾
$ 162.97
$ 128.80
$ 147.66
$ 119.29
Total cost $ 2,149
$ 1,754
$ 6,480
$ 5,604
⁽¹⁾Shares repurchased in the open market reflect repurchases that settled during the three and nine months ended June 30, 2020 and 2019. All shares repurchased in the open market have been retired and constitute authorized but unissued shares.

⁽²⁾Figures in the table may not recalculate exactly due to rounding. Average repurchase price per share and total cost is calculated based on unrounded numbers.

In January 2019,, the Company’s board of directors authorized an ~~additional~~ $8.5 billion share repurchase ~~program.~~program and in January 2020, authorized an additional $9.5 billion share purchase program (the “January 2020 Program”). These authorizations have no expiration date. As of June 30, ~~2019,~~2020, the Company’s January ~~2019 share repurchase program~~2020 Program had remaining authorized funds of ~~$6.2~~$7.0 billion for share repurchase. All share repurchase programs authorized prior to the January ~~2019~~2020 Program have been completed.

Dividends. On July ~~15, 2019~~,20, 2020, the Company’s board of directors declared a quarterly cash dividend of ~~$0.25~~$0.30 per share of class A common stock (determined in the case of class B and C common stock and UK&I and Europe preferred stock on an as-converted basis). The cash dividend will be paid on September ~~3, 2019,~~1, 2020, to all holders of record as of August ~~16, 2019.~~14, 2020. The Company declared and paid ~~$565~~$663 million and ~~$487~~$565 million during the three months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively and ~~$1.7~~$2.0 billion and ~~$1.4~~$1.7 billion during the nine months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively, in dividends to holders of the Company’s common and preferred stocks.

Note ~~10—~~11—Earnings Per Share

Basic earnings per share is computed by dividing net income available to each class of shares by the weighted-average number of shares of common stock outstanding and participating securities during the period. Net income is allocated to each class of common stock and participating securities based on its proportional ownership on an as-converted basis. The weighted-average number of shares outstanding of each class of common stock reflects changes in ownership over the periods presented. See Note 9—10—Stockholders’ Equity.

Diluted earnings per share is computed by dividing net income available by the weighted-average number of shares of common stock outstanding, participating securities and, if dilutive, potential class A common stock equivalent shares outstanding during the period. Dilutive class A common stock equivalents may consist of: (1) shares of class A common stock issuable upon the conversion of UK&I and Europe preferred stock and class B and C common stock based on the conversion rates in effect through the period, and (2) incremental shares of class A common stock calculated by applying the treasury stock method to the assumed exercise of employee stock options, the assumed purchase of stock under the Company’s Employee Stock Purchase Plan and the assumed vesting of unearned performance shares.

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

The following table⁽¹⁾ presents earnings per share for the three months ended June 30, ~~2019:~~2020:

Basic Earnings Per Share Diluted Earnings Per Share
(in millions, except per share data)

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)
Class A common stock $ 2,379
1,735
$ 1.37
$ 3,101
2,265
⁽³⁾
$ 1.37
Class B common stock 549
245
$ 2.23
548
245
$ 2.23
Class C common stock 63
12
$ 5.48
63
12
$ 5.48
Participating securities⁽⁴⁾
110
Not presented
Not presented
110
Not presented
Not presented
Net income $ 3,101


	Basic Earnings Per Share									Diluted Earnings Per Share
	(in millions, except per share data)
	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⁾
Class A common stock	$	1,814	1,690	$	1.07	$	2,373	2,214	⁽³⁾	$	1.07
Class B common stock	428		245	$	1.74	$	427	245		$	1.74
Class C common stock	46		11	$	4.29	$	47	11		$	4.29
Participating securities⁽⁴⁾	85		Not presented	Not presented		$	85	Not presented		Not presented
Net income	$	2,373

~~Table of Contents~~

~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

The following table⁽¹⁾ presents earnings per share for the nine months ended June 30, ~~2019:~~2020:

Participating securities⁽⁴⁾

Basic Earnings Per Share Diluted Earnings Per Share
(in millions, except per share data)

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)
Class A common stock $ 6,956
1,748
$ 3.98
$ 9,055
2,278
⁽³⁾
$ 3.97
Class B common stock 1,592
245
$ 6.49
1,590
245
$ 6.48
Class C common stock 186
12
$ 15.92
185
12
$ 15.90
Participating securities⁽⁴⁾
321
Not presented
Not presented
321
Not presented
Not presented
Net income $ 9,055


	Basic Earnings Per Share									Diluted Earnings Per Share
	(in millions, except per share data)
	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⁾
Class A common stock	$	2,379	1,735	$	1.37	$	3,101	2,265	⁽³⁾	$	1.37
Class B common stock	549		245	$	2.23	$	548	245		$	2.23
Class C common stock	63		12	$	5.48	$	63	12		$	5.48
Participating securities⁽⁴⁾	110		Not presented	Not presented		$	110	Not presented		Not presented
Net income	$	3,101

Basic Earnings Per Share Diluted Earnings Per Share
(in millions, except per share data)

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)
Class A common stock $ 1,793
1,784
$ 1.00
$ 2,329
2,321
⁽³⁾
$ 1.00
Class B common stock 406
245
$ 1.66
406
245
$ 1.65
Class C common stock 49
12
$ 4.02
49
12
$ 4.01
Participating securities⁽⁴⁾
81
Not presented
Not presented
81
Not presented
Not presented
Net income $ 2,329

Participating securities⁽⁴⁾

Basic Earnings Per Share Diluted Earnings Per Share
(in millions, except per share data)

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)
Class A common stock $ 5,746
1,798
$ 3.20
$ 7,456
2,337
⁽³⁾
$ 3.19
Class B common stock 1,293
245
$ 5.27
1,291
245
$ 5.26
Class C common stock 159
12
$ 12.78
158
12
$ 12.76
Participating securities⁽⁴⁾
258
Not presented
Not presented
259
Not presented
Not presented
Net income $ 7,456


⁽¹⁾	~~Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on unrounded numbers.~~

⁽²⁾

Net income is allocated based on proportional ownership on an as-converted basis. The weighted-average number of shares of as-converted class B common stock used in the income allocation was 400 million for the three and nine months ended June 30, 2019, and 405 million for the three and nine months ended June 30, 2018. The weighted-average number of shares of as-converted class C common stock used in the income allocation was 46 million and 47 million for the three and nine months ended June 30, 2019, respectively, and 49 million and 50 million for the three and nine months ended June 30, 2018, respectively. The weighted-average number of shares of preferred stock included within participating securities was 32 million of as-converted UK&I preferred stock for the three and nine months ended June 30, 2019 and 2018. The weighted-average number of shares of preferred stock included within participating securities was 44 million of as-converted Europe preferred stock for the three and nine months ended June 30, 2019 and 2018.

⁽³⁾

Weighted-average diluted shares outstanding are calculated on an as-converted basis and include incremental common stock equivalents, as calculated under the treasury stock method. The computation includes approximately 3 million common stock equivalents for the three and nine months ended June 30, 2019 and 2018, because their effect would have been dilutive. The computation excludes less than 1 million of common stock equivalents for the three and nine months ended June 30, 2019 and 2018, because their effect would have been anti-dilutive.

⁽⁴⁾

Participating securities include preferred stock outstanding and unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, such as the Company’s UK&I and Europe preferred stock, restricted stock awards, restricted stock units and earned performance-based shares. Participating securities’ income is allocated based on the weighted-average number of shares of as-converted stock.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL ~~STATEMENTS—~~STATEMENTS (UNAUDITED)—(Continued)

⁽¹⁾Net income is allocated based on proportional ownership on an as-converted basis. The weighted-average number of shares of as-converted class B common stock used in the income allocation was 398 million for the three and nine months ended June 30, 2020 and 400 million for the three and nine months ended June 30, 2019. The weighted-average number of shares of as-converted class C common stock used in the income allocation was 43 million and 44 million for the three and nine months ended June 30, 2020, respectively, and 46 million and 47 million for the three and nine months ended June 30, 2019, respectively. The weighted-average number of shares of preferred stock included within participating securities was 32 million of as-converted UK&I preferred stock for the three and nine months ended June 30, 2020 and 2019, and 44 million of as-converted Europe preferred stock for the three and nine months ended June 30, 2020 and 2019.

⁽²⁾Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on unrounded numbers.

⁽³⁾Weighted-average diluted shares outstanding are calculated on an as-converted basis and include incremental common stock equivalents, as calculated under the treasury stock method. The computation includes common stock equivalents of 3 million for the three and nine months ended June 30, 2020 and 2019, because their effect would have been dilutive. The computation excludes common stock equivalents of 1 million for the three and nine months ended June 30, 2020, and less than 1 million for the three and nine months ended June 30, 2019, because their effect would have been anti-dilutive.

⁽⁴⁾Participating securities include preferred stock outstanding and unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, such as the UK&I and Europe preferred stock and restricted stock units. Participating securities’ income is allocated based on the weighted-average number of shares of as-converted stock.

Note ~~11—~~12—Share-based Compensation

The Company granted the following equity awards to employees and non-employee directors under the 2007 Equity Incentive Compensation Plan, or the EIP, during the nine months ended June 30, ~~2019~~:2020:


	Granted	Weighted-Average Grant Date Fair Value		Weighted-Average Exercise Price
Non-qualified stock options	1,247,982	$	29.37	$	182.50
Restricted stock units	2,287,483	$	183.22
Performance-based shares⁽¹⁾	470,128	$	211.08

Granted
Weighted-Average
Grant Date Fair
Value

Weighted-Average
Exercise Price
Non-qualified stock options 1,109,645
$ 25.89
$ 134.76
Restricted stock units (“RSUs”) 2,706,680
$ 136.21

Performance-based shares⁽¹⁾
540,538
$ 153.42


⁽¹⁾⁽¹⁾	Represents the maximum number of ~~performance-based shares which could be earned.~~

~~The Company’s non-qualified stock options and RSUs are equity awards with service-only conditions and are accordingly expensed on a straight-line basis over the vesting period. The Company’s~~ performance-based shares ~~are equity awards with service, market and performance conditions that are accounted for using the graded-vesting method.~~ which could be earned.

The Company recorded share-based compensation cost related to the EIP of $102 million and $106 million for the three months ended June 30, 2020 and 2019, respectively, and $306 million and $307 million for the nine months ended June 30, 2020 and 2019, respectively, net of estimated forfeitures.

Note 13—Income Taxes

The effective income tax rates were 19% for the three and nine months ended June 30, ~~2019, respectively,~~2020, and ~~$85 million and $231 millionfor the three and nine months ended June 30, 2018, respectively, net of estimated forfeitures, which are adjusted as appropriate.~~

~~Note 12—Income Taxes~~

~~The effective income tax rates were~~ 20% and 19% for the three and nine months ended June 30, 2019, ~~respectively, and 17% and 20% for the three and nine months ended June 30, 2018,~~ respectively. The ~~effective tax rates for the three and nine months ended June 30, 2019 differ from~~difference in the effective tax rates inbetween the ~~same prior-year~~three-month periods was primarily due to the ~~effects~~change in geographic mix of ~~U.S. tax reform legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), enacted on December 22, 2017, as discussed below:~~

The Tax Act reduced the statutory federal corporate income tax rate from 35% to 21% effective January 1, 2018. In fiscal 2018, the Company’s statutory federal corporate rate was a blended rate of 24.5%. Federal tax expense for the nine months ended June 30, 2019 was determined at a 21% tax rate compared to the 24.5% tax rate in the prior-year period;

The Tax Act enacted a new deduction for foreign-derived intangible income (“FDII”) and a new tax on global intangible low-tax income (“GILTI”). Both FDII and GILTI became effective for the Company on October 1, 2018; and

~~The absence of the following items recorded during the nine months ended June 30, 2018:~~


▪	~~$80 million and $81 million benefits due to non-recurring audit settlements during the three months ended March 31, 2018 and June 30, 2018, respectively;~~


▪	a $1.1 billion non-recurring, non-cash benefit from the remeasurement of deferred tax balances recorded in the three months ended December 31, 2017, in connection with the reduction in U.S. federal tax rate enacted by the Tax Act; and


▪	~~a $1.1 billion one-time transition tax expense on certain untaxed foreign earnings recorded in the three months ended December 31, 2017, in connection with the requirement enacted by the Tax Act~~.

The Company previously recorded provisional amounts for the transition tax and the tax effects of various other tax provisions enacted by the Tax Act. As permitted by ASU 2018-05, the Company completed the determination of the accounting impacts of the transition tax and the tax effects of these various tax provisions in the three months ended December 31, 2018. The adjustments to the provisional amounts were not material. In addition, the Company adopted the accounting policy of accounting for taxes on GILTI in the period that it is subject to such tax.

~~Table of Contents~~

~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

income.

During the three and nine months ended June 30, ~~2019,~~2020, the Company’s gross unrecognized tax benefits increased by ~~$241~~$55 million and ~~$387~~$230 million, respectively. The ~~Company's~~Company’s net unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate, increased by ~~$51~~$31 million and ~~$134~~$70 million, respectively. The change in unrecognized tax benefits is primarily related to various tax positions across several jurisdictions. ~~During the three and nine months ended June 30, 2019, the~~The Company’s accrued interest related to uncertain tax positions increased by $18 million and $56 million during the three and nine months ended June 30, 2020, respectively, and $19 million and $51 million ~~respectively,~~during the three and ~~there were no significant changes in penalties.~~nine months ended June 30, 2019, respectively. During the three and nine months ended June 30, ~~2018,~~2020 and 2019, there were no significant changes in ~~interest and~~ penalties related to uncertain tax positions.

The Company’s tax filings are subject to examination by the U.S. federal, state and foreign taxing authorities. The timing and outcome of the final resolutions of the various ongoing income tax examinations are highly uncertain. It is not reasonably possible to estimate the increase or decrease in unrecognized tax benefits within the next twelve months.

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in the U.S. on March 27, 2020. The CARES Act includes several U.S. income tax provisions related to, among other things, net operating loss carrybacks, alternative minimum tax credits, modifications to the net interest deduction limitations, and technical amendments regarding the income tax depreciation of qualified improvement property placed in service after December 31, 2017. The CARES Act is not expected to have a material impact on the Company’s financial results.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

On July 22, 2020, UK enacted a legislation that repealed the previous tax rate reduction from 19% to 17% that was effective on April 1, 2020. The repeal of the UK tax rate reduction is not expected to significantly increase the Company’s ongoing effective tax rate, however, it will result in a one-time non-cash tax expense in the fourth quarter of fiscal 2020, due to the re-measurement of deferred taxes which are primarily related to intangibles recorded in purchase accounting upon the acquisition of Visa Europe in fiscal 2016.

Note ~~13—~~14—Legal Matters

The Company is party to various legal and regulatory proceedings. Some of these proceedings involve complex claims that are subject to substantial uncertainties and unascertainable damages. Accordingly, except as disclosed, the Company has not established reserves or ranges of possible loss related to these proceedings, as at this time in the proceedings, the matters do not relate to a probable loss and/or the amount or range of losses are not reasonably estimable. 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.

The following table summarizes the activity related to accrued litigation:

Nine Months Ended
June 30,
2019 2018
(in millions)
Balance at beginning of period $ 1,434
$ 982
Provision for uncovered legal matters 37
0
Provision for covered legal matters 165
601
Payments for legal matters (780 ) (155 )
Balance at end of period $ 856
$ 1,428


	Nine Months Ended June 30,
	2020		2019
	(in millions)
Balance at beginning of period	$	1,203	$	1,434
Provision for uncovered legal matters	7		37
Provision for covered legal matters	14		165
Reestablishment of prior accrual related to interchange multidistrict litigation	467		0
Payments for legal matters	(535)		(780)
Balance at end of period	$	1,156	$	856

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. See further discussion below under U.S. Covered Litigation and Note 4—5—U.S. and Europe Retrospective Responsibility Plans. 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 litigation committee. The total accrual related to the U.S. covered litigation could be either higher or lower than the escrow account balance.

The following table summarizes the accrual activity related to U.S. covered litigation:


	Nine Months Ended June 30,
	2020		2019
	(in millions)
Balance at beginning of period	$	1,198	$	1,428

Reestablishment of prior accrual related to interchange multidistrict litigation	467		0
Payments for U.S. covered litigation	(529)		(600)
Balance at end of period	$	1,136	$	828

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL ~~STATEMENTS—~~STATEMENTS (UNAUDITED)—(Continued)

In fiscal 2019, the Company paid $600 million from its litigation escrow account into a settlement fund established pursuant to the Amended Settlement Agreement with the Damages Class plaintiffs in the Interchange Multidistrict Litigation. Under the Amended Settlement Agreement, if class members opt out of the Damages Class, the defendants are entitled to receive takedown payments of up to $700 million (up to $467 million for Visa), based on the percentage of payment card sales volume attributable to merchants who have chosen to opt out. On December 13, 2019, the district court entered a final judgment order approving the Amended Settlement Agreement with the Damages Class plaintiffs. A takedown payment of approximately $467 million was received on December 27, 2019, and deposited into the Company’s litigation escrow account. The ~~following table summarizes~~deposit into the ~~activity related~~litigation escrow account and reestablishment of a prior accrual to address opt-out claims was recorded during the nine months ended June 30, 2020. See further discussion below under U.S. ~~covered litigation:~~

Nine Months Ended
June 30,
2019 2018
(in millions)
Balance at beginning of period $ 1,428
$ 978
Provision for interchange multidistrict litigation 0
600
Payments for U.S. covered litigation (600 ) (150 )
Balance at end of period $ 828
$ 1,428

Covered Litigation
.

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 conversion rates applicable to the UK&I preferred stock and Europe 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 4—5—U.S. and Europe Retrospective Responsibility Plans.

The following table summarizes the accrual activity related to VE territory covered litigation:

Nine Months Ended
June 30,
2019 2018
(in millions)
Balance at beginning of period $ 0
$ 1
Accrual for VE territory covered litigation 165
1
Payments for VE territory covered litigation (156 ) (2 )
Balance at end of period $ 9
$ 0


	Nine Months Ended June 30,
	2020		2019
	(in millions)
Balance at beginning of period	$	5	$	0
Provision for VE territory covered litigation	14		165
Payments for VE territory covered litigation	(5)		(156)
Balance at end of period	$	14	$	9

U.S. Covered Litigation

Interchange Multidistrict Litigation (MDL) – Putative Class Actions

On ~~December 6, 2018, the district court held a hearing on the Damages Class plaintiffs’ motion for preliminary approval of the Amended Settlement Agreement, and on January 24,~~November 20, 2019, the district court granted preliminary approval. On June 7, 2019, the Damages Class plaintiffs moved for final approval of the Amended Settlement Agreement. Certain merchants in the proposed settlement class have objected to the settlement and/or submitted requests to opt out of the settlement class. Although the deadline to opt out of the settlement class was July 23, 2019, the class administrator has until August 7, 2019 to send the final report indicating the number of merchants that chose to opt out of the settlement class. The district court is scheduled to hold a final settlement approval hearing on November 7, 2019.

~~Settlement discussions with plaintiffs purporting to act on behalf of the putative Injunctive Relief Class are ongoing. On January 16, 2019,~~denied the bank ~~defendants moved~~defendants’ motion to dismiss the claims brought against them by the putative Injunctive Relief Class.

On December 13, 2019, the district court granted final approval of the Amended Settlement Agreement relating to claims by the Damages Class, which was subsequently appealed.

On May 29, 2020, a complaint was filed by Old Jericho Enterprise, Inc. against Visa and Mastercard on behalf of a purported class of gasoline retailers operating in 24 states and the District of Columbia. The complaint alleges violations of the antitrust laws of those jurisdictions and seeks recovery for plaintiffs as indirect purchasers. Visa believes Plaintiffs’ claims are released by the Amended Settlement Agreement and are, nevertheless, covered by the U.S. Retrospective Responsibility Plan.

On June 1, 2020, Visa, jointly with other defendants, served a motion for summary judgment regarding the claims in the Injunctive Relief Class oncomplaint. The putative Injunctive Relief Class plaintiffs served a motion for partial summary judgment.

Interchange Multidistrict Litigation (MDL) - Individual Merchant Actions

Visa has reached settlements with a number of merchants representing approximately 30% of the ~~grounds that plaintiffs lack standing and fail to state a claim against~~Visa-branded payment card sales volume of merchants who opted out of the ~~bank defendants.~~

Amended Settlement Agreement with the Damages Class plaintiffs.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL ~~STATEMENTS—~~STATEMENTS (UNAUDITED)—(Continued)

On June 1, 2020, Visa, jointly with other defendants, served motions for summary judgment regarding the claims in certain of the individual merchant actions, as well as certain declaratory judgment claims brought by Visa, Mastercard, and some U.S. financial institutions. Plaintiffs in certain of the individual merchant actions served motions for partial summary judgment.

VE Territory Covered Litigation

UKEurope Merchant Litigation

Since July 2013, in excess of 500 Merchants (the capitalized term “Merchant,” when used in this section, means a merchant together with subsidiary/affiliate companies that are party to the same claim) have commenced proceedings against Visa Europe, Visa Inc. and other Visa ~~International~~subsidiaries in the UK, ~~(and recently in Germany)~~Germany, Belgium and Poland primarily relating to interchange rates in Europe and in some cases relating to fees charged by Visa and certain Visa rules. As of the filing date, Visa Europe, Visa Inc. and other Visa ~~International~~subsidiaries have settled the claims asserted by over 100 Merchants, leaving more than ~~350~~400 Merchants with outstanding claims. In addition, over 30 additional Merchants have threatened to commence similar proceedings. Standstill agreements have been entered into with respect to some of those threatened Merchant claims, several of which have been settled.

On ~~November 29, 2018, Visa was granted permission to appeal aspects of the Court of Appeal’s judgment to~~June 17, 2020, the Supreme Court of the United Kingdom ~~including the question of whether~~found that Visa’s UK domestic interchange restricted competition. The ~~Supreme Court is scheduled~~case will now continue before the UK Competition Appeals Tribunal to ~~hold a hearing on~~determine the ~~appeal in January 2020.~~lawful level of interchange and the amount the plaintiff may be entitled to recover.

Other Litigation

~~European Commission Proceedings~~

~~Inter-regional Interchange Investigation.~~ On December 4, 2018, the European Commission (EC) announced formal public consultation (known as “market testing”) of commitments proposed by Visa pursuant to Article 9 of Council Regulation (EC) No 1/2003 in order for the EC to conclude its investigation. Subject to market testing, the EC intends to adopt a decision declaring the commitments to be binding on Visa and concluding that there are no longer grounds for action by the EC and without any finding of infringement of the law by Visa. If accepted by the EC, the proposed commitments require Visa to cap its inter-regional multilateral interchange rates at 1.50% credit and 1.15% debit for “Card-Not-Present” transactions and 0.30% credit and 0.20% debit for “Card Present” transactions on consumer debit and credit cards issued outside of the European Economic Area when used at merchants located inside of the European Economic Area. The commitments would last for a period of five years following implementation. No fine will be imposed against Visa, and the commitments are proposed without prejudice to Visa’s position that its conduct did not infringe any law. The EC’s market testing was completed in January 2019.

On April 29, 2019, the EC adopted a decision making Visa’s commitments to limit interregional interchange rates in Europe binding from October 19, 2019. The commitments will remain in effect until November 1, 2024.

Canadian Merchant Litigation

Between August 2019 and January 2020, the Courts of Appeal in British Columbia, Quebec, Ontario and Saskatchewan rejected the appeals filed by Wal-Mart Canada ~~and/or~~and Home Depot of Canada Inc. ~~have~~In January 2020, Wal-Mart Canada and Home Depot of Canada Inc. filed ~~notices of~~applications to appeal the decisions of the British Columbia, ~~Ontario, Saskatchewan,~~ Quebec and Ontario courts to the Supreme Court of Canada and those applications were denied on March 26, 2020. Wal-Mart Canada and Home Depot of Canada Inc. also filed an application seeking the Supreme Court’s review of the Saskatchewan court's decision. The application and an appeal to the Alberta ~~decisions approving the settlements.~~ Court of Appeal remain pending.

Pulse Network

On June ~~13 and 14, 2019,~~5, 2020, the U.S. Court of Appeals ~~in British Columbia held~~for the Fifth Circuit set the case for re-argument during the week of August 31, 2020.

Nuts for Candy

On December 31, 2019, plaintiff filed a ~~hearing~~motion to ~~consider objections to~~dismiss and for attorneys’ fees and costs based on the settlement ~~approval decision~~reached between the parties and ~~reserved decision.~~

~~EMV Chip Liability Shift~~

~~Plaintiffs filed a renewed motion for class certification on July 16, 2018, following an earlier denial~~the grant of final approval of the 2018 Amended Settlement Agreement as discussed above in Interchange Multidistrict Litigation (MDL) - Putative Class Actions.

On February 25, 2020, the court granted plaintiff’s motion ~~without prejudice. Plaintiffs’ renewed motion was terminated without prejudice~~ to ~~reinstatement on October 17, 2018, but was subsequently reinstated~~dismiss and ~~is currently pending.~~

~~Kroger~~

~~The litigation was stayed until February 2, 2019. Visa~~for attorneys’ fees and ~~Kroger reached an agreement in principle to resolve this lawsuit, and subsequently entered into a settlement agreement.~~costs. The case ~~was~~has been dismissed ~~on July 24, 2019.~~with prejudice.

Federal Trade Commission Civil Investigative Demand (Formerly Voluntary Access Letter)

On June 9, 2020, the Federal Trade Commission issued a Civil Investigative Demand to Visa requesting additional documents and information.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL ~~STATEMENTS—~~STATEMENTS (UNAUDITED)—(Continued)

Euronet Litigation

~~Nuts for Candy~~

On ~~October 18, 2018, the court stayed the Nuts for Candy case pending the district court’s decision on preliminary approval of the Amended Settlement Agreement discussed above under~~ ~~Interchange Multidistrict Litigation (MDL) – Putative Class Actions~~,December 13, 2019, Euronet 360 Finance Limited, Euronet Polska Spolka z.o.o. and ~~pending final approval of that agreement if preliminary approval is granted. Preliminary approval was granted on January 24, 2019, which extended the stay~~Euronet Services spol. s.r.o. (“Euronet”) served a claim in the ~~Nuts for Candy case pending final approval~~UK alleging that certain rules affecting ATM access fees in Poland, the Czech Republic and Greece by Visa Inc. and Mastercard Incorporated, and certain of their subsidiaries, breach various competition laws. Euronet seeks damages, costs, and injunctive relief to prevent the ~~Amended Settlement Agreement.~~defendants from enforcing the aforementioned rules.

~~Ohio Attorney General Civil Investigative Demand~~

European Commission Staged Digital Wallets Investigation

On ~~January 8, 2019,~~June 26, 2020, the ~~State of Ohio Office of the Attorney General~~European Commission (“EC”) informed Visa that ~~the investigation~~it has ~~been terminated.~~

~~Australian Competition & Consumer Commission~~

~~On July 12, 2019, the Australian Competition & Consumer Commission (ACCC) informed Visa that the ACCC has commenced an~~opened a preliminary investigation into ~~certain agreements~~Visa’s rules regarding staged digital wallets and ~~interchange fees relating to Visa Debit.~~issued a request for information regarding such rules. Visa is cooperating with the ~~ACCC.~~

EC.

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ITEM 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations

This management’s discussion and analysis provides a review of the results of operations, financial condition and the liquidity and capital resources of Visa Inc. and its subsidiaries (“Visa,” “we,” “us,” “our” or the “Company”) on a historical basis and outlines the factors that have affected recent earnings, as well as those factors that may affect future earnings. The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and related notes included elsewhere in this report.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that relate to, among other things, the impact on our future financial position, results of operations and cash flows as a result of the coronavirus (“COVID-19”); our future operations, prospects, developments, strategies and growth of our business; anticipated expansion of our products in certain countries; industry developments; anticipated benefits of our acquisitions; expectations regarding litigation matters, investigations and proceedings; timing and amount of stock repurchases; sufficiency of sources of liquidity and funding; effectiveness of our risk management programs; and expectations regarding the impact of recent accounting pronouncements on our consolidated financial statements. Forward-looking statements generally are identified by words such as “believes,” “estimates,” “expects,” “intends,” “may,” “projects,” “could,” “should,” “will,” “continue” and other similar expressions. All statements other than statements of historical fact could be forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, many of which are beyond our control and are difficult to predict. We describe risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, any of these forward-looking statements in our SEC filings, including our Annual Report on Form 10-K, for the year ended September 30, ~~2018~~2019 and our subsequent reports on Forms 10-Q and 8-K. Except as required by law, we do not intend to update or revise any forward-looking statements as a result of new information, future events or otherwise.

Table of Contents

Overview

Visa is a global payments technology company that enables fast, secure and reliable electronic payments across more than 200 countries and territories. We facilitate global commerce through the transfer of value and information among a global network of consumers, merchants, financial institutions, businesses, strategic partners and government entities. Our advanced transaction processing network, VisaNet, enables authorization, clearing and settlement of payment transactions and allows us to provide our financial institution and merchant clients a wide range of products, platforms and value-added services.

Financial overview.~~Our~~ Our as-reported U.S. GAAP and non-GAAP net income and diluted earnings per share are as follows:


	Three Months Ended June 30,						2020 vs. 2019		Nine Months Ended June 30,				2020 vs. 2019
	2020		2019		% Change⁽¹⁾		2020		2019		% Change⁽¹⁾
	(in millions, except percentages and per share data)
Net income, as reported	$	2,373	$	3,101	(23)	%	$	8,729	$	9,055	(4)	%
Diluted earnings per share, as reported	$	1.07	$	1.37	(22)	%	$	3.92	$	3.97	(1)	%
Non-GAAP net income⁽²⁾	$	2,347	$	3,099	(24)	%	$	8,717	$	8,991	(3)	%
Non-GAAP diluted earnings per share⁽²⁾	$	1.06	$	1.37	(23)	%	$	3.91	$	3.95	(1)	%

⁽¹⁾Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.

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

Coronavirus. COVID-19 continues to have an impact globally. While we have been actively monitoring the worldwide spread of COVID-19, the extent to which COVID-19 will ultimately impact our business remains difficult to predict. Our priority remains the safety of our employees, clients and the communities in which we live and operate. We are taking a measured approach in bringing our employees back in the office and will continue to have most of our employees work remotely for the rest of 2020. We continue to remain in close and regular contact with our employees, clients, partners and governments globally to help them navigate these challenging times.

Revenues in the third quarter of fiscal 2020 were impacted by declines in volumes and transactions as a result of social distancing, shelter-in-place or total lock-down orders imposed by countries that began in the second quarter of fiscal 2020. In the quarter, we saw spending improve each month as most countries began to relax these restrictions. Cross-border volume however, continued to be heavily impacted by the decline in travel, which only improved moderately through the quarter. While we have taken measures to modify our business practices and reduce operating expenses, including scaling back hiring plans, restricting travel, lowering marketing spend and the use of external resources, the impact that COVID-19 will have on our business remains difficult to predict due to numerous uncertainties, including the transmissibility, severity and duration of the outbreak, the effectiveness of social distancing measures or actions that are voluntarily adopted by the public or required by governments or public health authorities, the development and availability of effective treatments or vaccines, the impact to our employees and our operations, the business of our clients, supplier and business partners and other factors identified in Part II, Item 1A “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed with the SEC on May 4, 2020. We will continue to evaluate the nature and extent of the impact to our business.

Highlights for the first nine months of fiscal 2020. Net revenues for the three and nine months ended June 30, ~~2018 reflected the impact of certain significant items that we believe~~2020 were not indicative of our operating performance in these or future periods, as they were either non-recurring or had no cash impact. There were no comparable adjustments recorded for the three and nine months ended June 30, 2019. Our as-reported U.S. GAAP and adjusted non-GAAP net income and diluted earnings per share for these periods were as follows:

Three Months Ended
June 30, 2019
vs.
2018 Nine Months Ended
June 30, 2019
vs.
2018
(in millions, except percentages and per share data) 2019 2018
%
Change⁽¹⁾
2019 2018
%
Change⁽¹⁾
Net income, as reported $ 3,101
$ 2,329
33 % $ 9,055
$ 7,456
21 %
Diluted earnings per share, as reported $ 1.37
$ 1.00
36 % $ 3.97
$ 3.19
25 %
Net income, as adjusted⁽²⁾
$ 3,101
$ 2,792
11 % $ 9,055
$ 7,933
14 %
Diluted earnings per share, as adjusted⁽²⁾
$ 1.37
$ 1.20
14 % $ 3.97
$ 3.39
17 %


⁽¹⁾	~~Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.~~


⁽²⁾	~~For a full reconciliation of our adjusted financial results, see tables in~~ ~~Adjusted financial results~~ ~~below.~~

~~Highlights for the first nine months of fiscal 2019~~. Our business is affected by overall economic conditions and consumer spending. Our business performance during the nine months ended June 30, 2019 reflects continued global consumer spending growth amidst uneven global economic conditions. We recorded net revenues of $5.8$4.8 billion and ~~$16.8~~$16.7 billion, ~~for the three~~respectively, and ~~nine months ended June 30, 2019, respectively, an increase of 11%~~decreased 17% and ~~11%~~1%, respectively, over the prior-year comparable periods, ~~reflecting continued growth~~driven by the year-over-year changes in nominal payments volume, nominal cross-border volume and processed ~~transactions.~~transactions, which were impacted by the spread of COVID-19 globally starting in the latter part of March 2020. Exchange rate movements in the three and nine months ended June 30, ~~2019,~~2020, as partially mitigated by our hedging program, negatively impacted our net revenues ~~growth~~ by approximately ~~two~~one half of a percentage ~~points~~point and one ~~and a half~~ percentage ~~points,~~point, respectively.

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Total operating expenses for the three months ended June 30, 2020 were ~~$1.9~~$1.8 billion, and ~~$5.6~~decreased 5% over the prior-year comparable period, on both a GAAP and non-GAAP basis, driven by our overall cost reduction strategy. Total operating expenses for the nine months ended June 30, 2020 were $5.8 billion, on both a GAAP and non-GAAP basis, and increased 4% and 3%, respectively, over the prior-year comparable period, primarily due to higher depreciation and amortization from our ongoing investments and personnel in support of our strategy for future growth.

Non-GAAP financial results. We use non-GAAP financial measures of our performance which exclude certain items which we believe are not representative of our continuing operations and may distort our longer-term operating trends. We consider non-GAAP measures useful to investors because they provide greater transparency into management’s view and assessment of our ongoing operating performance. Starting in fiscal 2020, we revised our non-GAAP methodology to exclude the impact of gains and losses on our equity investments, amortization of acquired intangible assets and acquisition-related costs for acquisitions that closed in fiscal 2019 and subsequent periods. Prior year amounts have been restated to conform to our current presentation.

•Gains and losses on equity investments. Gains and losses on equity investments include periodic non-cash fair value adjustments and gains and losses upon sale of an investment.These long-term investments are strategic in nature and are primarily private company investments. Gains and losses and the related tax impacts associated with these investments are tied to the performance of thecompanies that we invest inand therefore do not correlate to the underlying performance of our business. During the three and nine months ended June 30, ~~2019,~~2020, we recorded net realized and unrealized gains of $51 million and $62 million, respectively, ~~a decrease~~and related tax expense of ~~18%~~$11 million and ~~1% over~~$14 million, respectively. For the same prior-year comparable ~~period. Adjusted~~periods, we recorded net realized and unrealized gains of $9 million and $89 million, respectively, and related tax expense of $3 million and $21 million, respectively.

•Amortization of acquired intangible assets. Amortization of acquired intangible assets consists of amortization of intangible assets such as developed technology, customer relationships and brands acquired in connection with business combinations executed beginning in fiscal 2019. Amortization charges for our acquired intangible assets are non-cash and are significantly affected by the timing, frequency and size of our acquisitions, rather than our core operations. As such, we have excluded this amount and the related tax impact to facilitate an evaluation of our current operating ~~expenses, which excludes the non-cash~~performance and comparison to our past operating ~~expense for the litigation provision related to the interchange multidistrict litigation in~~performance. During the three and nine months ended June 30, ~~2018, increased 10%~~2020, we recorded amortization of acquired intangible assets of $13 million and ~~11%,~~$35 million, respectively, ~~over~~and related tax benefit of $3 million and $8 million, respectively. For the same prior-year comparable ~~periods. The increase in both~~ periods, ~~was~~we recorded amortization of acquired intangible assets of $2 million.

•Acquisition-related costs. Acquisition-related costs consist primarily ~~due to higher personnel, marketing~~of one-time transaction and ~~general and administrative expenses, as we continue to invest in~~integration costs associated with our business ~~growth.~~

~~Adjusted financial results.~~ ~~Our financial results~~combinations. These costs include professional fees, technology integration fees, restructuring activities and other direct costs related to the purchase and integration of acquired entities. It also includes retention equity and deferred equity compensation when they are agreed upon as part of the purchase price of the transaction but are required to be recognized as expense post-combination. We have excluded these amounts and the related tax impacts as the expenses are recognized for a limited duration and do not reflect the underlying performance of our business. During the three ~~and~~months ended June 30, 2020, we recorded acquisition-related costs of $4 million. During the nine months ended June 30, ~~2018 reflected~~2020, we recorded acquisition-related costs of $11 million and related tax benefit of $2 million. For the ~~impact~~same prior-year comparable periods, we recorded acquisition-related costs of ~~certain significant items that we believe were not indicative~~$3 million and related tax benefit of ~~our ongoing~~$1 million.

Non-GAAP operating performance in these or future periods, as they were either non-recurring or had no cash impact. As such, we believe the presentation of adjusted financial results excluding the following items provides a clearer understanding of our operating performance for the periods presented. There were no comparable adjustments recorded for the threeexpense, non-operating income (expense), income tax provision, effective income tax rate, net income and ~~nine months ended June 30, 2019.~~

•

~~Litigation provision.~~ During the three and nine months ended June 30, 2018, we recorded a litigation provision of $600 million and related tax benefits of $137 million associated with the interchange multidistrict litigation. The tax impact is determined by applying applicable federal and state tax rates to the litigation provision. Under the U.S. retrospective responsibility plan, we recover the monetary liabilities related to the U.S. covered litigation through a reduction to the conversion rate of our class B common stock to shares of class A common stock. See ~~Note 4—U.S. and Europe Retrospective Responsibility Plans~~ ~~and~~ ~~Note 13—Legal Matters~~ ~~to our unaudited consolidated financial statements.~~

•

~~Remeasurement of deferred tax balances.~~ During the nine months ended June 30, 2018, in connection with the Tax Act’s reduction of the corporate income tax rate, we remeasured our net deferred tax liabilities as of the enactment date, resulting in the recognition of a non-recurring, non-cash income tax benefit of $1.1 billion. See ~~Note 12—Income Taxes~~ ~~to our unaudited consolidated financial statements.~~

•

~~Transition tax on foreign earnings.~~ During the nine months ended June 30, 2018, in connection with the Tax Act’s requirement that we include certain untaxed foreign earnings of non-U.S. subsidiaries in our fiscal 2018 taxable income, we recorded a one-time transition tax estimated to be approximately $1.1 billion. See ~~Note 12—Income Taxes~~ ~~to our unaudited consolidated financial statements.~~

~~Adjusted financial results are non-GAAP financial measures and~~diluted earnings per share should not be relied upon as substitutes for, or considered in isolation from, measures calculated in accordance with U.S. GAAP. The following ~~table reconciles~~tables reconcile our as-reported financial measures, calculated in accordance with U.S. GAAP, to our respective non-GAAP ~~adjusted~~ financial measures for the three and nine months ended June 30, ~~2018~~2020 and 2019.

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	Three Months Ended June 30, 2020
	Operating Expenses		Non-operating Income (Expense)		Income Tax Provision		Effective Income Tax Rate⁽¹⁾		Net Income		Diluted Earnings Per Share⁽¹⁾
	(in millions, except percentages and per share data)
As reported	$	1,838	$	(67)	$	559	19.1	%	$	2,373	$	1.07
(Gains) Losses on equity investments, net	—		(51)		(11)				(40)		(0.02)
Amortization of acquired intangible assets	(13)		—		3				10		—
Acquisition-related costs	(4)		—		—				4		—
Non-GAAP	$	1,821	$	(118)	$	551	19.0	%	$	2,347	$	1.06


	Nine Months Ended June 30, 2020
	Operating Expenses		Non-operating Income (Expense)		Income Tax Provision		Effective Income Tax Rate⁽¹⁾		Net Income		Diluted Earnings Per Share⁽¹⁾
	(in millions, except percentages and per share data)
As reported	$	5,806	$	(204)	$	2,006	18.7	%	$	8,729	$	3.92
(Gains) Losses on equity investments, net	—		(62)		(14)				(48)		(0.02)
Amortization of acquired intangible assets	(35)		—		8				27		0.01
Acquisition-related costs	(11)		—		2				9		—
Non-GAAP	$	5,760	$	(266)	$	2,002	18.7	%	$	8,717	$	3.91

~~There were no comparable adjustments recorded for~~


	Three Months Ended June 30, 2019
	Operating Expenses		Non-operating Income (Expense)		Income Tax Provision		Effective Income Tax Rate⁽¹⁾		Net Income		Diluted Earnings Per Share⁽¹⁾
	(in millions, except percentages and per share data)
As reported	$	1,932	$	(42)	$	765	19.8	%	$	3,101	$	1.37


(Gains) Losses on equity investments, net	—		(9)		(3)				(6)		—
Amortization of acquired intangible assets	(2)		—		—				2		—
Acquisition-related costs	(3)		—		1				2		—

Non-GAAP	$	1,927	$	(51)	$	763	19.8	%	$	3,099	$	1.37


	Nine Months Ended June 30, 2019
	Operating Expenses		Non-operating Income (Expense)		Income Tax Provision		Effective Income Tax Rate⁽¹⁾		Net Income		Diluted Earnings Per Share⁽¹⁾
	(in millions, except percentages and per share data)
As reported	$	5,574	$	(93)	$	2,118	19.0	%	$	9,055	$	3.97


(Gains) Losses on equity investments, net	—		(89)		(21)				(68)		(0.03)
Amortization of acquired intangible assets	(2)		—		—				2		—
Acquisition-related costs	(3)		—		1				2		—

Non-GAAP	$	5,569	$	(182)	$	2,098	18.9	%	$	8,991	$	3.95

⁽¹⁾Figures in the ~~three~~table may not recalculate exactly due to rounding. Effective income tax rate, diluted earnings per share and ~~nine months ended June 30, 2019.~~their respective totals are calculated based on unrounded numbers.

Three Months Ended June 30, 2018
(in millions, except percentages and per share data) Operating Expenses
Operating Margin
_(1),(2)
Income Tax Provision Net Income
Diluted Earnings Per Share⁽¹⁾
As reported $ 2,355
55 % $ 483
$ 2,329
$ 1.00
Litigation provision (600 ) 11 % 137
463
0.20
As adjusted $ 1,755
67 % $ 620
$ 2,792
$ 1.20

Nine Months Ended June 30, 2018
(in millions, except percentages and per share data) Operating Expenses
Operating Margin
_(1),(2)
Income Tax Provision Net Income
Diluted Earnings Per Share⁽¹⁾
As reported $ 5,627
63 % $ 1,812
$ 7,456
$ 3.19
Litigation provision (600 ) 4 % 137
463
0.20
Remeasurement of deferred tax balances —
— % 1,133
(1,133 ) (0.49 )
Transition tax on foreign earnings —
— % (1,147 ) 1,147
0.49
As adjusted $ 5,027
67 % $ 1,935
$ 7,933
$ 3.39


⁽¹⁾	~~Figures in the table may not recalculate exactly due to rounding. Diluted earnings per share and its respective total are calculated based on unrounded numbers.~~


⁽²⁾	~~Operating margin is calculated as operating income divided by net operating revenues.~~

Common stock repurchases. In January 2020, our board of directors authorized a $9.5 billion share repurchase program (the “January 2020 Program”). During the three months ended June 30, ~~2019,~~2020, we repurchased 136 million shares of our class A common stock in the open market ~~using $2.1 billion of cash on hand. In January 2019, our board of directors authorized an additional $8.5 billion share repurchase program.~~for $1.1 billion. As of June 30, ~~2019, we~~2020, our January 2020 Program had remaining authorized funds of ~~$6.2~~$7.0 billion for share repurchase. See Note 9—10—Stockholders’ Equity to our unaudited consolidated financial statements.

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Acquisition. On January 13, 2020, we entered into a definitive agreement to acquire Plaid, Inc. for $5.3 billion. We will pay approximately $4.9 billion of cash and $0.4 billion of retention equity and deferred equity consideration.This acquisition is subject to customary closing conditions, including ongoing regulatory reviews and approvals, which are expected to be completed by the end of 2020.

Senior notes. In April 2020, we issued fixed-rate senior notes in an aggregate principal amount of $4.0 billion, with maturities ranging between 7 and 20 years. See Note 8—Debt to our unaudited consolidated financial statements.

Payments volume and transaction counts. Payments volume is the primary driver for our service revenues, and the number of processed transactions is the primary driver for our data processing revenues. During the three months ended December 31, 2018, we updated our definition of payments volume to now include all disbursement volume related to Visa Direct, in addition to the funding volume previously included. All prior periods presented have been adjusted accordingly. Please refer to the Operational Performance Data section of Exhibit 99.1 to our Current Report on Form 8-K filed on January 30, 2019 for more details on the impact from this update in payments volume definition.

Nominal payments volume in the United States posted mid to high single-digit growth for the three ~~months~~ and ~~low double-digit growth for the~~ nine months ended March 31, ~~2019~~2020⁽¹⁾, respectively, driven mainly by consumer debit and ~~commercial.~~ commercial, partially offset by decreased spending beginning in the latter part of March 2020 as countries imposed social distancing, shelter-in-place or total lock-down orders.

Nominal international payments volume ~~growth was negatively impacted by~~declined as a result of decreased spending related to social distancing, shelter-in-place or total lock-down orders and unfavorable movements in ~~the~~ U.S. dollar exchange rates. On a constant-dollar basis, which excludes the impact of exchange rate movements, our international payments volume growth rate for the three and nine months ended March 31, ~~2019~~2020 was 8%3% and ~~10%~~7%, respectively. ~~Growth in processed~~

Processed transactions ~~reflects~~declined 13% for the three months ended June 30, 2020 as a result of social distancing, shelter-in-place or total lock-down orders. Processed transactions grew 1% for the nine months ended June 30, 2020, reflecting the ongoing worldwide shift to electronic ~~payments.~~payments, partially offset by the impact of social distancing, shelter-in-place or total lock-down orders.

The following table⁽²⁾ presents nominal payments and cash volume:


	United States										International								Visa Inc.
	Three Months Ended March 31,⁽¹⁾										Three Months Ended March 31,⁽¹⁾								Three Months Ended March 31,⁽¹⁾
	2020		2019		% Change⁽²⁾		2020		2019		% Change⁽²⁾		2020		2019		% Change⁽²⁾
	(in billions, except percentages)
Nominal payments volume
Consumer credit	$	371	$	358	4	%	$	566	$	606	(7)	%	$	937	$	964	(3)	%
Consumer debit⁽³⁾	452		420		8	%	490		454		8 %		942		874		8 %
Commercial⁽⁴⁾	160		153		5	%	91		92		(2)	%	251		245		2 %
Total nominal payments volume⁽²⁾	$	983	$	930	6	%	$	1,147	$	1,153	(1)	%	$	2,130	$	2,083	2 %
Cash volume	139		141		(1)	%	504		537		(6)	%	643		678		(5)	%
Total nominal volume^(2),(5)	$	1,123	$	1,071	5	%	$	1,651	$	1,690	(2)	%	$	2,773	$	2,760	0 %

	United States										International								Visa Inc.
	Nine Months Ended March 31,⁽¹⁾										Nine Months Ended March 31,⁽¹⁾								Nine Months Ended March 31,⁽¹⁾
	2020		2019		% Change⁽²⁾		2020		2019		% Change⁽²⁾		2020		2019		% Change⁽²⁾
	(in billions, except percentages)
Nominal payments volume
Consumer credit	$	1,200	$	1,139	5 %		$	1,875	$	1,857	1 %		$	3,074	$	2,996	3 %
Consumer debit⁽³⁾	1,358		1,249		9 %		1,526		1,392		10 %		2,883		2,641		9 %
Commercial⁽⁴⁾	502		466		8 %		299		284		5 %		800		749		7 %
Total nominal payments volume⁽²⁾	$	3,059	$	2,854	7 %		$	3,699	$	3,533	5 %		$	6,758	$	6,386	6 %
Cash volume	432		427		1 %		1,645		1,703		(3)	%	2,077		2,129		(2)	%
Total nominal volume^(2),(5)	$	3,491	$	3,280	6 %		$	5,344	$	5,236	2 %		$	8,835	$	8,516	4 %

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United States International Visa Inc.

Three Months Ended March 31,⁽¹⁾

Three Months Ended March 31,⁽¹⁾

Three Months Ended March 31,⁽¹⁾
2019 2018 %
Change 2019 2018 %
Change 2019 2018 %
Change
(in billions, except percentages)
Nominal payments volume
Consumer credit $ 357
$ 341
5 % $ 608
$ 614
(1 )% $ 965
$ 955
1 %
Consumer debit⁽³⁾
420
383
10 % 455
452
1 % 875
835
5 %
Commercial⁽⁴⁾
153
138
11 % 92
90
2 % 245
228
7 %
Total nominal payments volume $ 930
$ 862
8 % $ 1,155
$ 1,156
— % $ 2,085
$ 2,018
3 %
Cash volume 141
139
1 % 540
598
(10 )% 680
737
(8 )%
Total nominal volume⁽⁵⁾
$ 1,071
$ 1,001
7 % $ 1,694
$ 1,753
(3 )% $ 2,765
$ 2,755
— %

United States International Visa Inc.

Nine Months Ended March 31,⁽¹⁾

Nine Months Ended March 31,⁽¹⁾

Nine Months Ended March 31,⁽¹⁾
2019 2018 %
Change 2019 2018 %
Change 2019 2018 %
Change
(in billions, except percentages)
Nominal payments volume
Consumer credit $ 1,139
$ 1,063
7 % $ 1,860
$ 1,826
2 % $ 2,998
$ 2,889
4 %
Consumer debit⁽³⁾
1,250
1,114
12 % 1,393
1,331
5 % 2,643
2,445
8 %
Commercial⁽⁴⁾
466
411
13 % 283
269
6 % 749
680
10 %
Total nominal payments volume $ 2,855
$ 2,588
10 % $ 3,536
$ 3,425
3 % $ 6,391
$ 6,013
6 %
Cash volume 427
418
2 % 1,705
1,839
(7 )% 2,132
2,258
(6 )%
Total nominal volume⁽⁵⁾
$ 3,281
$ 3,007
9 % $ 5,241
$ 5,264
— % $ 8,522
$ 8,271
3 %

The following table⁽²⁾ presents nominal and constant payments and cash volume growth:


	International						Visa Inc.						International				Visa Inc.
	Three Months Ended March 31, 2020 vs. 2019^(1),(2)						Three Months Ended March 31, 2020 vs. 2019^(1),(2)						Nine Months Ended March 31, 2020 vs. 2019^(1),(2)				Nine Months Ended March 31, 2020 vs. 2019^(1),(2)
	Nominal		Constant⁽⁶⁾		Nominal		Constant⁽⁶⁾		Nominal		Constant⁽⁶⁾		Nominal		Constant⁽⁶⁾
Payments volume growth
Consumer credit growth	(7)	%	(4)	%	(3)	%	(1)	%	1 %		3 %		3 %		4 %
Consumer debit growth⁽³⁾	8 %		11 %		8 %		9 %		10 %		12 %		9 %		11 %
Commercial growth⁽⁴⁾	(2)	%	2 %		2 %		4 %		5 %		8 %		7 %		8 %
Total payments volume growth⁽²⁾	(1)	%	3 %		2 %		4 %		5 %		7 %		6 %		7 %
Cash volume growth	(6)	%	(3)	%	(5)	%	(2)	%	(3)	%	(1)	%	(2)	%	(1)	%
Total volume growth⁽²⁾	(2)	%	1 %		0 %		3 %		2 %		4 %		4 %		5 %

⁽¹⁾Service revenues in a given quarter are assessed based on nominal payments volume in the prior quarter. Therefore, service revenues reported for the three and nine months ended June 30, 2020 and 2019 were based on nominal payments volume reported by our financial institution clients for the three and nine months ended March 31, 2020 and 2019, respectively.

⁽²⁾Figures in the table may not recalculate exactly due to rounding. Percentage changes and totals are calculated based on unrounded numbers.

International Visa Inc. International Visa Inc.

Three Months
Ended March 31,
2019 vs. 2018⁽¹⁾

Three Months
Ended March 31,
2019 vs. 2018⁽¹⁾

Nine Months
Ended March 31,
2019 vs. 2018⁽¹⁾

Nine Months
Ended March 31,
2019 vs. 2018⁽¹⁾
Nominal
Constant⁽⁶⁾
Nominal
Constant⁽⁶⁾
Nominal
Constant⁽⁶⁾
Nominal
Constant⁽⁶⁾
Payments volume growth
Consumer credit growth (1 )% 7 % 1 % 6 % 2 % 8 % 4 % 8 %
Consumer debit growth⁽³⁾
1 % 10 % 5 % 10 % 5 % 11 % 8 % 12 %
Commercial growth⁽⁴⁾
2 % 11 % 7 % 11 % 6 % 14 % 10 % 13 %
Total payments volume growth — % 8 % 3 % 8 % 3 % 10 % 6 % 10 %
Cash volume growth (10 )% (1 )% (8 )% (1 )% (7 )% 1 % (6 )% 1 %
Total volume growth (3 )% 5 % — % 6 % — % 7 % 3 % 8 %


⁽¹⁾⁽³⁾Includes consumer prepaid volume and Interlink volume.	Service revenues in a given quarter are assessed based on nominal payments volume in the prior quarter. Therefore, service revenues reported for the three and nine months ended June 30, 2019 and 2018 were based on nominal payments volume reported by our financial institution clients for the three and nine months ended March 31, 2019 and 2018, respectively.


⁽²⁾	~~Figures in the table may not recalculate exactly due to rounding. Percentage changes and totals are calculated based on unrounded numbers.~~


⁽³⁾	~~Includes consumer prepaid volume and Interlink volume.~~


⁽⁴⁾	~~Includes large, middle and small business credit and debit, as well as commercial prepaid volume.~~

⁽⁵⁾

Total nominal volume is the sum of total nominal payments volume and cash volume. Total nominal payments volume is the total monetary value of transactions for goods and services that are purchased on cards and other form factors carrying the Visa, Visa Electron, Interlink and V PAY brands. Cash volume generally consists of cash access transactions, balance access transactions, balance transfers and convenience checks. Total nominal volume is provided by our financial institution clients, subject to review by Visa. On occasion, previously presented volume information may be updated. Prior-period updates, other than the change to the payments volume definition, are not material.


⁽⁶⁾	~~Growth on a constant-dollar basis excludes the impact of foreign currency fluctuations against the U.S. dollar.~~

⁽⁴⁾Includes large, medium and small business credit and debit, as well as commercial prepaid volume.

⁽⁵⁾Total nominal volume is the sum of total nominal payments volume and cash volume. Total nominal payments volume is the total monetary value of transactions for goods and services that are purchased on cards and other form factors carrying the Visa, Visa Electron, Interlink and V PAY brands. Cash volume generally consists of cash access transactions, balance access transactions, balance transfers and convenience checks. Total nominal volume is provided by our financial institution clients, subject to review by Visa. On occasion, previously presented volume information may be updated. Prior-period updates, other than the change to the payments volume definition, are not material.

⁽⁶⁾Growth on a constant-dollar basis excludes the impact of foreign currency fluctuations against the U.S. dollar.

The following table⁽¹⁾ provides the number of transactions involving cards and other form factors carrying the Visa, Visa Electron, Interlink, V PAY and PLUS cards processed on Visa’s networks during the periods presented:


	Three Months Ended June 30,											Nine Months Ended June 30,
		2020		2019			% Change⁽¹⁾		2020		2019			% Change⁽¹⁾
		(in millions, except percentages)
Visa processed transactions	30,676		35,428		(13)	%		103,391		101,904		1	%

⁽¹⁾Figures in the table may not recalculate exactly due to rounding. Percentage change is calculated based on unrounded numbers.

Three Months Ended June 30, Nine Months Ended June 30,
2019
2018
%
Change 2019 2018 %
Change
(in millions, except percentages)
Visa processed transactions 35,428
31,728
12 % 101,904
91,557
11 %


⁽¹⁾ Table of Contents	~~Figures in the table may not recalculate exactly due to rounding. Percentage change is calculated based on unrounded numbers.~~

Results of Operations

Net Revenues

The following table sets forth our net revenues earned in the U.S. and internationally:


	Three Months Ended June 30,						2020 vs. 2019						Nine Months Ended June 30,				2020 vs. 2019
	2020		2019		$ Change		% Change⁽¹⁾		2020		2019		$ Change		% Change⁽¹⁾
	(in millions, except percentages)
U.S.	$	2,380	$	2,587	$	(207)	(8)	%	$	7,747	$	7,573	$	174	2	%
International	2,457		3,253		(796)		(24)	%	8,998		9,267		(269)		(3)	%
Net revenues	$	4,837	$	5,840	$	(1,003)	(17)	%	$	16,745	$	16,840	$	(95)	(1)	%

Three Months Ended
June 30, 2019 vs. 2018 Nine Months Ended
June 30, 2019 vs. 2018
2019 2018
$
Change

%
Change⁽¹⁾
2019 2018
$
Change

%
Change⁽¹⁾
(in millions, except percentages)
U.S. $ 2,587
$ 2,334
$ 253
11 % $ 7,573
$ 6,896
$ 677
10 %
International 3,253
2,906
347
12 % 9,267
8,279
988
12 %
Net revenues $ 5,840
$ 5,240
$ 600
11 % $ 16,840
$ 15,175
$ 1,665
11 %


⁽¹⁾⁽¹⁾	Figures ~~in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.~~

~~The increase~~ in ~~net~~the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.

Net revenues ~~reflects~~decreased primarily due to the ~~continued growth~~year-over-year changes in ~~nominal~~ payments volume, ~~nominal~~ cross-border volume and processed ~~transactions.~~transactions, which were impacted by COVID-19 starting in the latter part of March 2020.

Our net revenues are impacted by the overall strengthening or weakening of the U.S. dollar as payments volume and related revenues denominated in local currencies are converted to U.S. dollars. Exchange rate movements in the three and nine months ended June 30, ~~2019,~~2020, as partially mitigated by our hedging program, negatively impacted our net revenues ~~growth~~ by approximately ~~two~~ one half of a percentage ~~points~~point and one ~~and a half~~ percentage ~~points~~,point, respectively.

The following table sets forth the components of our net revenues:


	Three Months Ended June 30,						2020 vs. 2019						Nine Months Ended June 30,				2020 vs. 2019
	2020		2019		$ Change		% Change⁽¹⁾		2020		2019		$ Change		% Change⁽¹⁾
	(in millions, except percentages)
Service revenues	$	2,409	$	2,405	$	4	—	%	$	7,587	$	7,164	$	423	6	%
Data processing revenues	2,525		2,662		(137)		(5)	%	8,100		7,564		536		7	%
International transaction revenues	1,102		1,977		(875)		(44)	%	4,953		5,624		(671)		(12)	%
Other revenues	314		342		(28)		(8)	%	1,071		968		103		11	%
Client incentives	(1,513)		(1,546)		33		(2)	%	(4,966)		(4,480)		(486)		11	%
Net revenues	$	4,837	$	5,840	$	(1,003)	(17)	%	$	16,745	$	16,840	$	(95)	(1)	%

⁽¹⁾Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.

•Service revenues were flat in the third quarter of fiscal 2020 as COVID-19 spread globally starting in the latter part of March 2020 with a 2% growth in nominal payments volume during the three-month comparable period. Service revenues grew 6% during the nine-month comparable period, in line with nominal payments volume growth of 6%.

•Data processing revenues were impacted by a decline in processed transactions of 13% and growth of 1% during the three-month and nine-month comparable periods, respectively, as a result of the spread of COVID-19 globally starting in the latter part of March 2020. Data processing revenues benefited from value-added services, acquisition-related revenues and favorable business mix. For the nine-month comparable period, data processing revenues also benefited from select pricing modifications effective in 2019.

•International transaction revenues driven by nominal cross-border volumes, excluding transactions within Europe, declined 48% and 16% during the three-month and nine-month comparable periods, respectively, as COVID-19 spread globally starting in the latter part of March 2020. For the three-month comparable period, international transaction revenues were also impacted by fluctuations in the volatility of a broad range of currencies and favorable business mix. For the nine-month comparable period, international transaction revenues benefited from select pricing modifications effective in 2019.

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Three Months Ended
June 30, 2019 vs. 2018 Nine Months Ended
June 30, 2019 vs. 2018
2019 2018
$
Change

%
Change⁽¹⁾
2019 2018 $
Change
%
Change⁽¹⁾
(in millions, except percentages)
Service revenues $ 2,405
$ 2,196
$ 209
10 % $ 7,164
$ 6,595
$ 569
9 %
Data processing revenues 2,662
2,359
303
13 % 7,564
6,633
931
14 %
International transaction revenues 1,977
1,830
147
8 % 5,624
5,248
376
7 %
Other revenues 342
229
113
49 % 968
688
280
41 %
Client incentives (1,546 ) (1,374 ) (172 ) 13 % (4,480 ) (3,989 ) (491 ) 12 %
Net revenues $ 5,840
$ 5,240
$ 600
11 % $ 16,840
$ 15,175
$ 1,665
11 %
•Other revenues decreased in the third quarter of fiscal 2020 primarily due to lower marketing services revenues, lower value-added services revenues tied to travel-related card benefits and non-recurring revenues in the prior year three-month comparable period. For the nine-month comparable period, other revenues increased primarily due to consulting and marketing services related fees and other value-added services.

•Client incentives decreased during the three-month comparable period in correlation with the decline in payments volumes and revenues. In the nine-month comparable period, client incentives increased mainly due to incentives recognized on long-term customer contracts that were initiated or renewed in the past 12 months partially offset by the recent decline in global payments volume. The amount of client incentives we record in future periods will vary based on changes in performance expectations, actual client performance, amendments to existing contracts or execution of new contracts.

⁽¹⁾

~~Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.~~


•	~~Service revenues~~ increased primarily due to 3% and 6% growth in nominal payments volume during the three and nine-month comparable periods, respectively, as well as select pricing modifications effective in the third quarter of fiscal 2019.


•	~~Data processing revenues~~ increased mainly due to overall growth in processed transactions of 12% and 11% during the three and nine-month comparable periods, respectively, as well as select pricing modifications impacting revenue growth in the first and second quarter of fiscal 2019.

•

~~International transaction revenues~~ increased due to a 2% and 1% growth in nominal cross-border volumes during the three and nine-month comparable periods, respectively, select pricing modifications effective after the third quarter of fiscal 2018 and changes in the mix of our international transaction revenues. These increases were partially offset by lower volatility in a broad range of currencies.


•	~~Other revenues~~ increased during the three and nine-month comparable periods primarily due to changes in the classification and timing of recognition of revenue as a result of the adoption of the new revenue standard as well as an increase in revenues from license fees and optional services.

•

~~Client incentives~~ increased during the three and nine-month comparable periods mainly due to incentives recognized on long-term customer contracts that were initiated or renewed after the third quarter of fiscal 2018 and overall growth in global payments volume. Client incentives also increased due to changes in classification and timing of recognition as a result of the adoption of the new revenue standard. The amount of client incentives we record in future periods will vary based on changes in performance expectations, actual client performance, amendments to existing contracts or execution of new contracts.

Operating Expenses

The following table sets forth components of our total operating expenses:


	Three Months Ended June 30,						2020 vs. 2019						Nine Months Ended June 30,				2020 vs. 2019
	2020		2019		$ Change		% Change⁽¹⁾		2020		2019		$ Change		% Change⁽¹⁾
	(in millions, except percentages)
Personnel	$	941	$	872	$	69	8	%	$	2,863	$	2,573	$	290	11	%
Marketing	174		282		(108)		(38)	%	683		799		(116)		(15)	%
Network and processing	172		184		(12)		(7)	%	536		528		8		1	%
Professional fees	95		113		(18)		(16)	%	304		305		(1)		—	%
Depreciation and amortization	197		165		32		19	%	571		484		87		18	%
General and administrative	258		315		(57)		(18)	%	840		855		(15)		(2)	%
Litigation provision	1		1		—		(40)	%	9		30		(21)		(72)	%
Total operating expenses	$	1,838	$	1,932	$	(94)	(5)	%	$	5,806	$	5,574	$	232	4	%

⁽¹⁾Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.

•Personnel expenses increased primarily due to continued increase in headcount in support of our investment strategy for future growth, offset by lower incentive compensation.

•Marketing expenses decreased reflecting our overall cost reduction strategy, the absence of FIFA Women's World Cup in fiscal 2020 and the delay of the Tokyo Olympics to fiscal 2021. The decrease is offset by an increase in client marketing spend during the nine-month comparable period.

•Professional fees decreased reflecting our overall cost reduction strategy.

•Depreciation and amortization expenses increased primarily due to additional depreciation and amortization from our on-going investments, including acquisitions.

•General and administrative expenses decreased primarily due to travel restrictions and our overall cost reduction strategy, offset by acquisition related expenses during the nine-months comparable period.

•Litigation provision decreased primarily due to lower accruals for uncovered litigation.

Three Months Ended
June 30, 2019 vs. 2018 Nine Months Ended
June 30, 2019 vs. 2018
2019 2018
$
Change

%
Change⁽¹⁾
2019 2018
$
Change

%
Change⁽¹⁾
(in millions, except percentages)
Personnel $ 872
$ 852
$ 20
2 % $ 2,573
$ 2,355
$ 218
9 %
Marketing 282
240
42
18 % 799
724
75
10 %
Network and processing 184
169
15
9 % 528
498
30
6 %
Professional fees 113
112
1
1 % 305
312
(7 ) (2 )%
Depreciation and amortization 165
152
13
9 % 484
450
34
8 %
General and administrative 315
230
85
37 % 855
688
167
24 %
Litigation provision 1
600
(599 ) (100 )% 30
600
(570 ) (95 )%
Total operating expenses $ 1,932
$ 2,355
$ (423 ) (18 )% $ 5,574
$ 5,627
$ (53 ) (1 )%


⁽¹⁾ Table of Contents	~~Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.~~


•	~~Personnel expenses~~ ~~increased primarily due to an increase in headcount, reflecting our strategy to invest for future growth.~~


•	~~Marketing expenses~~ increased in the three and nine month comparable periods primarily due to changes in the classification and timing of recognition of certain marketing expenses as a result of the adoption of the new revenue standard. The increase was partially offset in the nine month comparable period by spend for the Winter Olympics in PyeongChang in 2018, which did not recur in 2019.


•	~~General and administrativeexpenses~~ increased primarily as a result of unfavorable foreign currency fluctuations, changes in the classification and timing of recognition of certain general and administrative expenses as a result of the adoption of the new revenue standard, higher indirect taxes, and higher product enhancement costs in support of our business growth.


•	~~Litigation provision~~ ~~in 2018 reflects a $600 million accrual related to the U.S. covered litigation. See~~ ~~Note 4—U.S. and Europe Retrospective Responsibility Plans~~ ~~and~~ ~~Note 13—Legal Matters~~ ~~to our unaudited consolidated financial statements.~~

Non-operating Income (Expense)

The following table sets forth the components of our non-operating income (expense):


	Three Months Ended June 30,						2020 vs. 2019						Nine Months Ended June 30,				2020 vs. 2019
	2020		2019		$ Change		% Change⁽¹⁾		2020		2019		$ Change		% Change⁽¹⁾
	(in millions, except percentages)
Interest expense, net	$	(142)	$	(128)	$	(14)	11	%	$	(371)	$	(413)	$	42	(10)	%
Investment income and other	75		86		(11)		(12)	%	167		320		(153)		(48)	%
Total non-operating income (expense)	$	(67)	$	(42)	$	(25)	59	%	$	(204)	$	(93)	$	(111)	120	%

Three Months Ended
June 30, 2019 vs. 2018 Nine Months Ended
June 30, 2019 vs. 2018
2019 2018
$
Change

%
Change⁽¹⁾
2019 2018
$
Change

%
Change⁽¹⁾
(in millions, except percentages)
Interest expense, net $ (128 ) $ (155 ) $ 27
(17 )% $ (413 ) $ (462 ) $ 49
(10 )%
Investment income and other 86
82
4
7 % 320
182
138
77 %
Total non-operating income (expense) $ (42 ) $ (73 ) $ 31
(43 )% $ (93 ) $ (280 ) $ 187
(67 )%
⁽¹⁾Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.

•Interest expense, net increased during the three-month comparable period primarily as a result of the issuance of debt in the third quarter of fiscal 2020, offset by derivative instruments that lowered the cost of borrowing on a portion of our outstanding debt. Interest expense, net decreased during the nine-month comparable period primarily due to derivative instruments that lowered the cost of borrowing on a portion of our outstanding debt, offset by the issuance of debt in the third quarter of fiscal 2020.

•Investment income and other decreased primarily due to lower gains on our equity investments and lower interest income on our cash and investments.

⁽¹⁾

~~Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.~~


•	~~Interest expense~~ decreased in the three and nine months ended June 30, 2019 primarily as a result of entering into derivative instruments in fiscal 2019 that lowered the cost of borrowing on a portion of our outstanding debt.


•	~~Investment income and other~~ ~~increased in the three and nine months ended June 30, 2019 primarily due to higher interest income on our cash and investments as well as gains on our equity investments.~~

Effective Income Tax Rate

The effective income tax rates were 19% for the three and nine months ended June 30, 2020, and 20% and 19% for the three and nine months ended June 30, 2019, ~~respectively, and 17% and 20% for the three and nine months ended June 30, 2018,~~ respectively. The ~~effective tax rates for the three and nine months ended June 30, 2019 differ from~~difference in the effective tax rates inbetween the ~~same prior-year~~three-month periods was primarily due to the ~~effects~~change in geographic mix of income.

On July 22, 2020, UK enacted a legislation that repealed the previous tax rate reduction from 19% to 17% that was effective on April 1, 2020. The repeal of the ~~Tax Act enacted on December 22, 2017, as discussed below:~~

~~The Tax Act reduced the statutory federal corporate income~~UK tax rate ~~from 35%~~reduction is not expected to ~~21%~~significantly increase our ongoing effective ~~January 1, 2018. In fiscal 2018, our statutory federal corporate~~tax rate, ~~was~~however, it will result in a ~~blended rate of 24.5%. Federal~~one-time non-cash tax expense ~~for~~in the ~~nine months ended June 30, 2019 was determined at a 21% tax rate compared~~fourth quarter of fiscal 2020, due to the ~~24.5% tax rate~~re-measurement of deferred taxes which are primarily related to intangibles recorded in purchase accounting upon the ~~prior-year period;~~acquisition of Visa Europe in fiscal 2016.

~~The absence of the following items recorded during the nine months ended June 30, 2018:~~


▪	~~$80 million and $81 million benefits due to non-recurring audit settlements during the three months ended March 31, 2018 and June 30, 2018, respectively;~~


▪	a $1.1 billion non-recurring, non-cash benefit from the remeasurement of deferred tax balances recorded in the three months ended December 31, 2017, in connection with the reduction in U.S. federal tax rate enacted by the Tax Act; and


▪	~~a $1.1 billion one-time transition tax expense on certain untaxed foreign earnings recorded in the three months ended December 31, 2017, in connection with the requirement enacted by the Tax Act~~.

We previously recorded provisional amounts for the transition tax and the tax effects of various other tax provisions enacted by the Tax Act. As permitted by ASU 2018-05, we completed the determination of the accounting impacts of the transition tax and the tax effects of these various tax provisions in the three months ended December 31, 2018. The adjustments to the provisional amounts were not material. In addition, we adopted the accounting policy of accounting for taxes on GILTI in the period that it is subject to such tax.

~~Adjusted effective income tax rate.~~ Our financial results for the three and nine months ended June 30, 2018 reflect the impact of certain significant items that we believe were not indicative of our operating performance during these periods, as they were either non-recurring or had no cash impact. As such, we have presented our adjusted effective income tax rates for these periods in the table below, which we believe provides a clearer understanding of our operating performance for the reported periods. There were no comparable adjustments recorded for the three and nine months ended June 30, 2019. See ~~Overview—Adjusted financial results~~ ~~within this~~ ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~ ~~for descriptions of the adjustments in the table below.~~

Three Months Ended
June 30, 2018 Nine Months Ended
June 30, 2018
(in millions, except percentages) Income Before Income Taxes Income Tax Provision
Effective Income Tax Rate⁽¹⁾
Income Before Income Taxes Income Tax Provision
Effective Income Tax Rate⁽¹⁾
As reported $ 2,812
$ 483
17.2 % $ 9,268
$ 1,812
19.5 %
Litigation provision 600
137
600
137

Remeasurement of deferred tax
balances
—
—
—
1,133

Transition tax on foreign earnings —
—
—
(1,147 )
As adjusted $ 3,412
$ 620
18.2 % $ 9,868
$ 1,935
19.6 %


⁽¹⁾	~~Figures in the table may not recalculate exactly due to rounding. Effective income tax rate is calculated based on unrounded numbers.~~

Liquidity and Capital Resources

Cash Flow Data

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

Nine Months Ended
June 30,
2019 2018
(in millions)
Total cash provided by (used in):
Operating activities $ 8,742
$ 9,465
Investing activities 413
(1,305 )
Financing activities (9,401 ) (8,744 )
Effect of exchange rate changes on cash and cash equivalents (62 ) (89 )
Decrease in cash, cash equivalents, restricted cash and restricted cash equivalents $ (308 ) $ (673 )


	Nine Months Ended June 30,
	2020		2019
	(in millions)
Total cash provided by (used in):
Operating activities	$	8,344	$	8,742
Investing activities	2,308		413
Financing activities	(4,723)		(9,401)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents	173		(62)
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents	$	6,102	$	(308)

Operating activities. Cash provided by operating activities for the nine months ended June 30, ~~2019~~2020 was lower than the prior-year comparable period ~~primarily~~ due to higher ~~payments from the litigation escrow account in the current year~~client incentives and timing of settlement. Partially offset by lower cash paid for taxes and the ~~first installment payment~~receipt of the ~~transition tax in connection~~$467 million takedown payment associated with the ~~Tax Act, partially offset by continued growth in~~Interchange Multidistrict Litigation. See Note 14—Legal Matters to our ~~underlying business.~~unaudited consolidated financial statements.

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Investing activities. Cash provided by investing activities for the nine months ended June 30, ~~2019~~2020 increased primarily ~~included higher proceeds from the sales and maturities~~due to fewer purchases of investment securities ~~combined with fewer purchases,~~ as compared to the prior-year period.

Financing activities. Cash used in financing activities for the nine months ended June 30, ~~2019~~2020 was ~~higher~~lower than the prior-year comparable period primarily due to proceeds received from the ~~payment~~issuance of senior notes and the absence of the deferred purchase consideration ~~increase in the repurchases of our class A common stock and higher dividends paid in the current year. This increase was partially offset by the redemption of the Senior Notes due December 2017~~payment, made in the prior year. Partially offset by higher share repurchase and higher dividends paid. See Note 9—8—Debt and Note 10—Stockholders’ Equity to our unaudited consolidated financial statements.

Sources of Liquidity

Our primary sources of liquidity are cash on hand, cash flow from operations, our investment portfolio and access to various equity and borrowing arrangements. Funds from operations are maintained in cash and cash equivalents and short-term or long-term available-for-sale investment securities based upon our funding requirements, access to liquidity from these holdings and the returns that these holdings provide. Based on our current cash flow forecasts of our short-term and long-term liquidity needs, we believe that our current and projected sources of liquidity will be sufficient to meet our projected liquidity needs for more than the next 12 months. Our ability to access cost-effective capital could be impacted by global credit market conditions. We will continue to assess our liquidity position and potential sources of supplemental liquidity in view of our operating performance, current economic and capital market conditions and other relevant circumstances.

Commercial paper program. We maintain a commercial paper program to support our working capital requirements and for other general corporate purposes. During the three months ended June 30, 2020, we repaid $1.0 billion of commercial paper that was issued during the three months ended March 31, 2020. We had no obligations outstanding under the program at June 30, 2020.

~~Credit facility extension.~~Senior notes~~On July 25, 2019,~~. In April 2020, we ~~extended the term~~issued fixed-rate senior notes in an aggregate principal amount of ~~our 5-year, unsecured revolving credit facility and increased the amount from~~ $4.0 billion, ~~to $5.0 billion. The credit facility will expire on July 25, 2024. The credit facility is no longer governed by any financial covenants. No other material terms were changed.~~with maturities ranging between 7 and 20 years. See Note 6—8—Debt to our unaudited consolidated financial statements.

~~Credit Ratings~~

~~During the nine months ended June 30, 2019, our credit ratings by Standard and Poor’s and Moody’s were upgraded to the following as compared to September 30, 2018:~~



	~~June 30, 2019~~		~~September 30, 2018~~
~~Rating Agency and Debt type~~	~~Rating~~	~~Outlook~~	~~Rating~~	~~Outlook~~
~~Standard and Poor’s~~
~~Short-term unsecured debt~~	~~A-1+~~	~~Stable~~	~~A-1~~	~~Positive~~
~~Long-term unsecured debt~~	~~AA-~~	~~Stable~~	A+	~~Positive~~
~~Moody’s~~
~~Long-term unsecured debt~~	~~Aa3~~	~~Stable~~	A1	~~Stable~~

Various factors affect our credit ratings, including changes in our operating performance, the economic environment, conditions in the electronic payment industry, our financial position and changes in our business strategy. We do not currently foresee any reasonable circumstances under which our credit ratings would be significantly downgraded. If a significant downgrade were to occur, it could adversely impact, among other things, our future borrowing costs and access to capital markets.

Uses of Liquidity

There has been no significant change to our primary uses of liquidity since September 30, ~~2018,~~2019, except as discussed below.

Common stock repurchases. During the nine months ended June 30, ~~2019,~~2020, we repurchased 4437 million shares of our class A common stock ~~using $6.5 billion of cash on hand. In January 2019, our board of directors authorized an additional $8.5 billion share repurchase program.~~for $6.6 billion. As of June 30, ~~2019, we~~2020, our January 2020 Program had remaining authorized funds of ~~$6.2~~$7.0 billion for share repurchase. ~~All share repurchase programs authorized prior to January 2019 have been completed.~~ See Note 9—10—Stockholders’ Equity to our unaudited consolidated financial statements.

Dividends. During the nine months ended June 30, ~~2019,~~2020, we declared and paid ~~$1.7~~$2.0 billion in dividends to holders of our common and preferred stock. On July ~~15, 2019,~~20, 2020, our board of directors declared a cash dividend in the amount of ~~$0.25~~$0.30 per share of class A common stock (determined in the case of class B and C common stock and UK&I and Europe preferred stock on an as-converted basis), which will be paid on September ~~3, 2019,~~1, 2020, to all holders of record as of August ~~16, 2019.~~14, 2020. See Note 9—10—Stockholders’ Equity to our unaudited consolidated financial statements. We expect to continue paying quarterly dividends in cash, subject to approval by the board of directors. All three series of preferred stock and class B and C common stock will share ratably on an as-converted basis in such future dividends.

~~Deferred purchase consideration.~~ Senior notes~~In connection with~~. A principal payment of $3.0 billion is due on December 14, 2020 on our ~~purchase of Visa Europe~~fixed-rate senior notes issued in ~~June 2016,~~December 2015, for which we were required to pay an additional €1.0 billion, plus 4% compound annual interest, on the third anniversary of the closing of the acquisition. In June 2019, we paid €1.1 billion in fulfillment of this obligation.

~~Derivative Financial Instruments~~

In March 2019, we entered into interest rate and cross-currency swap agreements on a portion of our outstanding 3.15% Senior Notes due December 2025 that allows us to manage our interest rate exposure through a combination of fixed and floating rates and reduce our overall cost of borrowing. Together these swap agreements effectively convert a portion of our U.S. dollar denominated fixed-rate payments into euro denominated floating-rate payments.have sufficient liquidity. See Note ~~5—Fair Value Measurements and Investments~~8—Debt to our unaudited consolidated financial statements.

~~Fair Value Measurements—Financial Instruments~~

~~As of June 30, 2019, our financial instruments measured at fair value on~~Acquisition. On January 13, 2020, we entered into a ~~recurring basis included $12.7~~definitive agreement to acquire Plaid, Inc. for $5.3 billion. We will pay approximately $4.9 billion of ~~assets~~cash and ~~$74 million~~$0.4 billion of ~~liabilities. See~~retention equity and deferred equity consideration. This acquisition is subject to customary closing conditions, ~~Note 5—Fair Value Measurements~~including ongoing regulatory reviews and ~~Investments~~approvals, which are expected to be completed by the end of 2020. We intend to ~~our unaudited consolidated financial statements.~~fund the acquisition with cash, cash equivalents and investments, as well as through the issuance of new indebtedness.

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ITEM 3.			Quantitative and Qualitative Disclosures about Market Risk

There ~~has~~have been no significant ~~change~~changes to our market risks since September 30, ~~2018, except as discussed below.~~2019.

In March 2019, we entered into interest rate and cross-currency swap agreements on a portion of our outstanding senior notes that allows us to manage our interest rate exposure through a combination of fixed and floating rates and reduce our overall cost of borrowing. Together these swap agreements effectively convert a portion of our U.S. dollar denominated fixed-rate payments into euro denominated floating-rate payments. By entering into interest rate swaps, we have assumed risks associated with market interest rate fluctuations. See ~~Note 5—Fair Value Measurements and Investments~~ ~~to our unaudited consolidated financial statements.~~



ITEM 4.			Controls and Procedures

Disclosure controls and procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) of Visa Inc. at the end of the period covered by this report and, based on such evaluation, have concluded that the disclosure controls and procedures of Visa Inc. were effective at the reasonable assurance level as of such date.

Changes in internal control over financial reporting. During the nine months ended June 30, 2019, the Company implemented a new client incentives accounting system along with enhancements and modifications to existing internal controls and procedures to comply with the new revenue standard. There have been no ~~other~~ changes in the internal control over financial reporting of Visa Inc. that occurred during the fiscal period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal controls over financial reporting although most of our staff are now working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation on our internal controls to address impacts to their design, implementation and operating effectiveness.

Table of Contents

PART II. OTHER INFORMATION



ITEM 1.			Legal Proceedings.

Refer to Note ~~13—~~14—Legal Matters to the unaudited consolidated financial statements included in this Form 10-Q for a description of the Company’s current material legal proceedings.



ITEM 1A.			Risk Factors.

For a discussion of the Company’s risk factors, see the information under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended September 30, ~~2018,~~2019, filed with the SEC on November ~~16, 2018.~~14, 2019 and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed with the SEC on May 4, 2020.



ITEM 2.			Unregistered Sales of Equity Securities and Use of Proceeds.

ISSUER PURCHASES OF EQUITY SECURITIES

The table below sets forth our purchases of common stock during the quarter ended June 30, ~~2019~~2020:


Period	Total Number of Shares Purchased	Average Purchase Price per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs^(1),(2)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs^(1),(2)
	(in millions, except per share data)
April 1 - 30, 2020	2	$	163.62	2	$	7,592
May 1 - 31, 2020	1	$	187.22	1	$	7,479
June 1 - 30, 2020	2	$	193.64	2	$	7,009
Total	5	$	180.47	5

⁽¹⁾The figures in the table reflect transactions according to the trade dates. For purposes of our unaudited consolidated financial statements included in this Form 10-Q, the impact of these repurchases is recorded according to settlement dates.

⁽²⁾:Our board of directors from time to time authorizes the repurchase of shares of our common stock up to a certain monetary limit. In January 2020, our board of directors authorized a share repurchase program for $9.5 billion. This authorization has no expiration date. All share repurchases authorized prior to January 2020 have been completed.

Period
Total Number
of Shares
Purchased

Average Price
Paid per Share

Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs^(1),(2)

Approximate Dollar Value
of Shares that May Yet Be Purchased
Under the Plans or Programs^(1),(2)
April 1-30, 2019 3,562,393
$ 159.94
3,562,393
$ 7,702,361,318
May 1-31, 2019 5,429,064
$ 162.06
5,429,064
$ 6,822,392,402
June 1-30, 2019 3,903,940
$ 169.03
3,903,940
$ 6,162,429,687
Total 12,895,397
$ 163.59
12,895,397


⁽¹⁾	The figures in the table reflect transactions according to the trade dates. For purposes of our unaudited consolidated financial statements included in this Form 10-Q, the impact of these repurchases is recorded according to settlement dates.


⁽²⁾	Our board of directors from time to time authorizes the repurchase of shares of our common stock up to a certain monetary limit. In January 2019, our board of directors authorized a share repurchase program for $8.5 billion. These authorizations have no expiration date. All share repurchase programs authorized prior to January 2019 have been completed.

Table of Contents



ITEM 3.			Defaults Upon Senior Securities.

None.



ITEM 4.			Mine Safety Disclosures.

Not applicable.



ITEM 5.			Other Information.

None.



+			Filed or furnished herewith.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	June 30, 2019			September 30, 2018
	(in millions, except par value data)
Assets
Cash and cash equivalents	$	7,912		$	8,162
Restricted cash equivalents—U.S. litigation escrow (Note 3 and Note 4)	902			1,491
Investment securities (Note 5)	3,265			3,547
Settlement receivable	1,689			1,582
Accounts receivable	1,531			1,208
Customer collateral (Note 3 and Note 7)	1,668			1,324
Current portion of client incentives	690			340
Prepaid expenses and other current assets	648			562
Total current assets	18,305			18,216
Investment securities (Note 5)	2,918			4,082
Client incentives	1,854			538
Property, equipment and technology, net	2,549			2,472
Goodwill	15,313			15,194
Intangible assets, net	27,272			27,558
Other assets	2,038			1,165
Total assets	$	70,249		$	69,225
Liabilities
Accounts payable	$	150		$	183
Settlement payable	2,420			2,168
Customer collateral (Note 3 and Note 7)	1,668			1,325
Accrued compensation and benefits	687			901
Client incentives	3,690			2,834
Accrued liabilities	1,358			1,160
Deferred purchase consideration	0			1,300
Accrued litigation (Note 13)	856			1,434
Total current liabilities	10,829			11,305
Long-term debt (Note 6)	16,694			16,630
Deferred tax liabilities	4,930			4,618
Other liabilities	2,801			2,666
Total liabilities	35,254			35,219
Equity
Preferred stock, $0.0001 par value, 25 shares authorized and 5 shares issued and outstanding as follows:
Series A convertible participating preferred stock, none issued (the “class A equivalent preferred stock”) (Note 9)	0			0
Series B convertible participating preferred stock, 2 shares issued and outstanding at June 30, 2019 and September 30, 2018 (the “UK&I preferred stock”) (Note 4 and Note 9)	2,285			2,291
Series C convertible participating preferred stock, 3 shares issued and outstanding at June 30, 2019 and September 30, 2018 (the “Europe preferred stock”) (Note 4 and Note 9)	3,177			3,179
Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 1,729 and 1,768 shares issued and outstanding at June 30, 2019 and September 30, 2018, respectively (Note 9)	0			0
Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at June 30, 2019 and September 30, 2018 (Note 9)	0			0
Class C common stock, $0.0001 par value, 1,097 shares authorized, 12 shares issued and outstanding at June 30, 2019 and September 30, 2018 (Note 9)	0			0
Right to recover for covered losses (Note 4)	(169		)	(7		)
Additional paid-in capital	16,552			16,678
Accumulated income	13,040			11,318
Accumulated other comprehensive income (loss), net:
Investment securities	6			(17		)
Defined benefit pension and other postretirement plans	(66		)	(61		)
Derivative instruments	24			60
Foreign currency translation adjustments	146			565
Total accumulated other comprehensive income (loss), net	110			547
Total equity	34,995			34,006
Total liabilities and equity	$	70,249		$	69,225



	Three Months Ended June 30, 2018
	Preferred Stock		Common Stock						Preferred Stock			Right to Recover for Covered Losses			Additional Paid-In Capital			Accumulated Income			Accumulated Other Comprehensive Income			Total Equity
	UK&I	Europe	Class A			Class B	Class C
	(in millions, except per share data)
Balance as of March 31, 2018	2	3	1,790			245	12		$	5,476		$	(6	)	$	16,713		$	10,192		$	1,728		$	34,103
Net income																		2,329						2,329
Other comprehensive income (loss), net of tax																					(987		)	(987		)
Comprehensive income																								1,342
VE territory covered losses incurred (Note 4)												(5		)										(5		)
Recovery through conversion rate adjustment (Note 4 and Note 9)									(6		)	6												—
Conversion of class C common stock upon sales into public market			1				0	⁽¹⁾																—
Vesting of restricted stock and performance-based shares			0		⁽¹⁾																			—
Share-based compensation, net of forfeitures (Note 11)			0		⁽¹⁾										89									89
Restricted stock and performance-based shares settled in cash for taxes			0		⁽¹⁾										(2		)							(2		)
Cash proceeds from issuance of common stock under employee equity plans			1												32									32
Cash dividends declared and paid, at a quarterly amount of $0.210 per Class A share (Note 9)																		(487		)				(487		)
Repurchase of class A common stock (Note 9)			(14	)											(146		)	(1,608		)				(1,754		)
Balance as of June 30, 2018	2	3	1,778			245	12		$	5,470		$	(5	)	$	16,686		$	10,426		$	741		$	33,318



	Nine Months Ended June 30, 2018
	Preferred Stock		Common Stock						Preferred Stock			Right to Recover for Covered Losses			Additional Paid-In Capital			Accumulated Income			Accumulated Other Comprehensive Income			Total Equity
	UK&I	Europe	Class A			Class B	Class C
	(in millions, except per share data)
Balance as of September 30, 2017	2	3	1,818			245	13		$	5,526		$	(52	)	$	16,900		$	9,508		$	878		$	32,760
Net income																		7,456						7,456
Other comprehensive income (loss), net of tax																					(137		)	(137		)
Comprehensive income																								7,319
VE territory covered losses incurred (Note 4)												(9		)										(9		)
Recovery through conversion rate adjustment (Note 4 and Note 9)									(56		)	56												—
Conversion of class C common stock upon sales into public market			3				(1	)																—
Vesting of restricted stock and performance-based shares			2																					—
Share-based compensation, net of forfeitures (Note11)			0		⁽¹⁾										242									242
Restricted stock and performance-based shares settled in cash for taxes			(1	)											(90		)							(90		)
Cash proceeds from issuance of common stock under employee equity plans			3												135									135
Cash dividends declared and paid, at a quarterly amount of $0.195 per Class A share in the first quarter and $0.210 per Class A share in the second and third quarters (Note 9)																		(1,435		)				(1,435		)
Repurchase of class A common stock (Note 9)			(47	)											(501		)	(5,103		)				(5,604		)
Balance as of June 30, 2018	2	3	1,778			245	12		$	5,470		$	(5	)	$	16,686		$	10,426		$	741		$	33,318



	Fiscal Year 2018 Closing Balance Sheet		Cumulative Transition Adjustment for New Revenue Standard		Fiscal Year 2019 Opening Balance Sheet
	(in millions)
Assets
Current portion of client incentives	$	340	$	199	$	539
Client incentives	538		614		1,152
Liabilities
Client incentives	2,834		241		3,075
Accrued liabilities	1,160		6		1,166
Deferred tax liabilities	4,618		108		4,726
Other liabilities	2,666		58		2,724
Equity
Accumulated income	11,318		400		11,718



	For the Three Months Ended June 30, 2019							For the Nine Months Ended June 30, 2019
	As Reported		Impact of the New Revenue Standard			Results Under Prior Revenue Standard		As Reported		Impact of the New Revenue Standard			Results Under Prior Revenue Standard
	(in millions)
Net revenues	$	5,840	$	(88	)	$	5,752	$	16,840	$	(179	)	$	16,661

Operating Expenses
Marketing	282		(31		)	251		799		(100		)	699
Professional fees	113		(5		)	108		305		(12		)	293
General and administrative	315		(11		)	304		855		(21		)	834
Total operating expenses	1,932		(47		)	1,885		5,574		(133		)	5,441
Operating income	3,908		(41		)	3,867		11,266		(46		)	11,220

Income before income taxes	3,866		(41		)	3,825		11,173		(46		)	11,127
Income tax provision	765		(8		)	757		2,118		(6		)	2,112
Net income	3,101		(33		)	3,068		9,055		(40		)	9,015



	June 30, 2019
	As Reported		Impact of the New Revenue Standard			Results Under Prior Revenue Standard
	(in millions)
Assets
Current portion of client incentives	$	690	$	(282	)	$	408
Client incentives	1,854		(811		)	1,043
Liabilities
Accounts payable	150		26			176
Client incentives	3,690		(439		)	3,251
Accrued liabilities	1,358		(18		)	1,340
Deferred tax liabilities	4,930		(112		)	4,818
Other liabilities	2,801		(110		)	2,691
Equity
Accumulated income	13,040		(440		)	12,600



	June 30,				September 30,
	2019		2018		2018		2017
	(in millions)
Cash and cash equivalents	$	7,912	$	8,505	$	8,162	$	9,874
Restricted cash and restricted cash equivalents:
U.S. litigation escrow	902		1,487		1,491		1,031
Customer collateral	1,668		1,346		1,324		1,106
Prepaid expenses and other current assets	187		0		0		0
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	10,669	$	11,338	$	10,977	$	12,011



	June 30, 2019						September 30, 2018
	As-Converted Value of Preferred Stock⁽²⁾			Book Value of Preferred Stock			As-Converted Value of Preferred Stock⁽³⁾			Book Value of Preferred Stock
	(in millions)
UK&I preferred stock	$	5,569		$	2,285		$	4,823		$	2,291
Europe preferred stock	7,606			3,177			6,580			3,179
Total	13,175			5,462			11,403			5,470
Less: right to recover for covered losses	(169		)	(169		)	(7		)	(7		)
Total recovery for covered losses available	$	13,006		$	5,293		$	11,396		$	5,463



	Fair Value Measurements Using Inputs Considered as
	Level 1				Level 2
	June 30, 2019		September 30, 2018		June 30, 2019		September 30, 2018
	(in millions)
Assets
Cash equivalents and restricted cash equivalents:
Money market funds	$	6,275	$	6,252
U.S. government-sponsored debt securities					$	50	$	1,048
Investment securities:
Marketable equity securities	125		113
U.S. government-sponsored debt securities					5,484		5,008
U.S. Treasury securities	574		2,508
Other current and non-current assets:
Derivative instruments					211		78
Total	$	6,974	$	8,873	$	5,745	$	6,134
Liabilities
Accrued and other liabilities:
Derivative instruments					$	74	$	22
Total	$	0	$	0	$	74	$	22



	June 30, 2019			September 30, 2018			Effective Interest Rate
	(in millions, except percentages)
2.20% Senior Notes due December 2020	$	3,000		$	3,000		2.30	%
2.15% Senior Notes due September 2022	1,000			1,000			2.30	%
2.80% Senior Notes due December 2022	2,250			2,250			2.89	%
3.15% Senior Notes due December 2025	4,000			4,000			3.26	%
2.75% Senior Notes due September 2027	750			750			2.91	%
4.15% Senior Notes due December 2035	1,500			1,500			4.23	%
4.30% Senior Notes due December 2045	3,500			3,500			4.37	%
3.65% Senior Notes due September 2047	750			750			3.73	%
Total senior notes	16,750			16,750
Unamortized discounts and debt issuance costs	(111		)	(120		)
Hedge accounting fair value adjustments	55			0
Total long-term debt	$	16,694		$	16,630



	Pension Benefits
	U.S. Plans						Non-U.S. Plans
	Three Months Ended June 30,						Three Months Ended June 30,
	2019			2018			2019			2018
	(in millions)
Service cost	$	0		$	0		$	1		$	1
Interest cost	8			8			3			3
Expected return on plan assets	(17		)	(17		)	(5		)	(5		)
Settlement loss	2			3			0			0
Total net periodic benefit cost (income)	$	(7	)	$	(6	)	$	(1	)	$	(1	)


⁽¹⁾ ⁽²⁾Class A common stock shares outstanding reflect repurchases that settled on or before June 30, 2020 and September 30, 2019. ⁽³⁾The class B to class A common stock conversion rate is presented on a rounded basis. Conversion calculations for dividend payments are based on a conversion rate rounded to the tenth decimal.	~~Figures in the table may not recalculate exactly due to rounding.~~


⁽²⁾	~~As-converted class A common stock is calculated based on unrounded numbers.~~


⁽³⁾	~~The reduction in equivalent number of shares of class A common stock was less than one million shares during the nine months ended June 30, 2019.~~


⁽⁴⁾	~~Class A common stock shares outstanding reflect repurchases settled on or before June 30, 2019 and September 30, 2018.~~


⁽⁵⁾	~~The class B to class A common stock conversion rate is presented on a rounded basis. Conversion calculations for dividend payments are based on a conversion rate rounded to the tenth decimal.~~


	Nine Months Ended June 30, 2020								Nine Months Ended June 30, 2019
	UK&I			Europe		UK&I			Europe
	(in millions, except per share data)
Reduction in equivalent number of as-converted class A common stock	0		⁽¹⁾	1		0		⁽¹⁾	0		⁽¹⁾
Effective price per share⁽²⁾	$	180.00		$	180.00	$	141.32		$	150.26
Recovery through conversion rate adjustment	$	72		$	92	$	6		$	2



	Nine Months Ended June 30, 2019				Twelve Months Ended September 30, 2018
	Preferred Stock
	UK&I		Europe		UK&I		Europe
	(in millions, except per share data)
Effective price per share⁽¹⁾	$	141.32	$	150.26	$	113.05	$	112.92
Recovery through conversion rate adjustment	$	6	$	2	$	35	$	21


⁽²⁾	~~All shares repurchased in the open market have been retired and constitute authorized but unissued shares.~~


⁽³⁾	~~Average repurchase price per share is calculated based on unrounded numbers.~~



	Three Months Ended June 30,				2019 vs. 2018		Nine Months Ended June 30,				2019 vs. 2018
(in millions, except percentages and per share data)	2019		2018		% Change⁽¹⁾		2019		2018		% Change⁽¹⁾
Net income, as reported	$	3,101	$	2,329	33	%	$	9,055	$	7,456	21	%
Diluted earnings per share, as reported	$	1.37	$	1.00	36	%	$	3.97	$	3.19	25	%
Net income, as adjusted⁽²⁾	$	3,101	$	2,792	11	%	$	9,055	$	7,933	14	%
Diluted earnings per share, as adjusted⁽²⁾	$	1.37	$	1.20	14	%	$	3.97	$	3.39	17	%



	Three Months Ended June 30,				2019 vs. 2018				Nine Months Ended June 30,				2019 vs. 2018
	2019		2018		$ Change		% Change⁽¹⁾		2019		2018		$ Change		% Change⁽¹⁾
	(in millions, except percentages)
U.S.	$	2,587	$	2,334	$	253	11	%	$	7,573	$	6,896	$	677	10	%
International	3,253		2,906		347		12	%	9,267		8,279		988		12	%
Net revenues	$	5,840	$	5,240	$	600	11	%	$	16,840	$	15,175	$	1,665	11	%



	Three Months Ended June 30, 2018						Nine Months Ended June 30, 2018
(in millions, except percentages)	Income Before Income Taxes		Income Tax Provision		Effective Income Tax Rate⁽¹⁾		Income Before Income Taxes		Income Tax Provision			Effective Income Tax Rate⁽¹⁾
As reported	$	2,812	$	483	17.2	%	$	9,268	$	1,812		19.5	%
Litigation provision	600		137				600		137
Remeasurement of deferred tax balances	—		—				—		1,133
Transition tax on foreign earnings	—		—				—		(1,147		)
As adjusted	$	3,412	$	620	18.2	%	$	9,868	$	1,935		19.6	%



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs^(1),(2)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs^(1),(2)
April 1-30, 2019	3,562,393	$	159.94	3,562,393	$	7,702,361,318
May 1-31, 2019	5,429,064	$	162.06	5,429,064	$	6,822,392,402
June 1-30, 2019	3,903,940	$	169.03	3,903,940	$	6,162,429,687
Total	12,895,397	$	163.59	12,895,397