UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q

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

For the quarterly period ended MarchDecember 31, 2020

OR

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

Commission file number 001-33977
v-20201231_g1.gif
VISA INC.
(Exact name of Registrant as specified in its charter)
Delaware26-0267673
(State or other jurisdiction
of incorporation or organization)		(IRS Employer
Identification No.)
Delaware26-0267673
(State or other jurisdiction
of incorporation or organization)
(IRS Employer
Identification No.)
P.O. Box 899994128-8999
San Francisco,California
(Address of principal executive offices)(Zip Code)
(650) (650) 432-3200
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A Common Stock, par value $0.0001 per shareVNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☑    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☑    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitionthe definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer☑Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐ No  ☑
As of April 30, 2020,January 22, 2021, there were 1,687,112,4371,696,113,603 shares outstanding of the registrant’s class A common stock, par value $0.0001 per share, 245,513,385 shares outstanding of the registrant’s class B common stock, par value $0.0001 per share, and 10,871,87310,685,736 shares outstanding of the registrant’s class C common stock, par value $0.0001 per share.


Table of Contents
VISA INC.
TABLE OF CONTENTS
 
Page
Page
PART I.
4
Item 1.
4
Consolidated Balance Sheets—March 31,December 31, 2020 and September 30, 20192020
4
Consolidated Statements of Operations—Three and Six Months Ended March 31,December 31, 2020 and 2019
5
Consolidated Statements of Comprehensive Income—Three and Six Months Ended March 31,December 31, 2020 and 2019
6
Consolidated Statements of Changes in Equity—Three and Six Months Ended MarchDecember 31, 2020 and 2019
7
Consolidated Statements of Cash Flows—SixThree Months Ended March 31,December 31, 2020 and 2019
119
1210
Item 2.
2724
Item 3.
3532
Item 4.
3632
PART II.
3733
Item 1.
3733
Item 1A.
3733
Item 2.
3833
Item 3.
3934
Item 4.
3934
Item 5.
3934
Item 6.
4035
4136

3
Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1.Financial Statements (Unaudited)
VISA INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
December 31,
2020		September 30,
2020
 (in millions, except par value data)
Assets
Cash and cash equivalents$15,032 $16,289 
Restricted cash equivalents—U.S. litigation escrow894 901 
Investment securities3,009 3,752 
Settlement receivable1,596 1,264 
Accounts receivable1,746 1,618 
Customer collateral1,993 1,850 
Current portion of client incentives1,281 1,214 
Prepaid expenses and other current assets729 757 
Total current assets26,280 27,645 
Investment securities161 231 
Client incentives3,192 3,175 
Property, equipment and technology, net2,713 2,737 
Goodwill16,121 15,910 
Intangible assets, net28,593 27,808 
Other assets3,366 3,413 
Total assets$80,426 $80,919 
Liabilities
Accounts payable$131 $174 
Settlement payable2,048 1,736 
Customer collateral1,993 1,850 
Accrued compensation and benefits600 821 
Client incentives4,479 4,176 
Accrued liabilities2,230 1,840 
Current maturities of debt0 2,999 
Accrued litigation909 914 
Total current liabilities12,390 14,510 
Long-term debt21,055 21,071 
Deferred tax liabilities5,343 5,237 
Other liabilities3,959 3,891 
Total liabilities42,747 44,709 
Equity
Preferred stock, $0.0001 par value, 25 shares authorized and 5 shares issued and outstanding as follows:
Series A convertible participating preferred stock, less than one shares issued and outstanding at December 31, 2020 and September 30, 2020 (the “series A preferred stock”)1,049 2,437 
Series B convertible participating preferred stock, 2 shares issued and outstanding at December 31, 2020 and September 30, 2020 (the “UK&I preferred stock”)1,097 1,106 
Series C convertible participating preferred stock, 3 shares issued and outstanding at December 31, 2020 and September 30, 2020 (the “Europe preferred stock”)1,537 1,543 
Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 1,696 and 1,683 shares issued and outstanding at December 31, 2020 and September 30, 2020, respectively0 0 
Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at December 31, 2020 and September 30, 20200 0 
Class C common stock, $0.0001 par value, 1,097 shares authorized, 11 shares issued and outstanding at December 31, 2020 and September 30, 20200 0 
Right to recover for covered losses(34)(39)
Additional paid-in capital18,063 16,721 
Accumulated income14,813 14,088 
Accumulated other comprehensive income (loss), net:
Investment securities2 3 
Defined benefit pension and other postretirement plans(194)(196)
Derivative instruments(538)(291)
Foreign currency translation adjustments1,884 838 
Total accumulated other comprehensive income (loss), net1,154 354 
Total equity37,679 36,210 
Total liabilities and equity$80,426 $80,919 
See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
4
 March 31,
2020		 September 30,
2019
 (in millions, except par value data)
Assets   
Cash and cash equivalents$9,740
 $7,838
Restricted cash equivalents—U.S. litigation escrow (Note 4 and Note 5)1,264
 1,205
Investment securities (Note 6)2,411
 4,236
Settlement receivable1,432
 3,048
Accounts receivable1,516
 1,542
Customer collateral (Note 4 and Note 9)1,698
 1,648
Current portion of client incentives957
 741
Prepaid expenses and other current assets889
 712
Total current assets19,907
 20,970
Investment securities (Note 6)1,064
 2,157
Client incentives3,110
 2,084
Property, equipment and technology, net2,776
 2,695
Goodwill15,755
 15,656
Intangible assets, net27,011
 26,780
Other assets3,197
 2,232
Total assets$72,820
 $72,574
Liabilities   
Accounts payable$161
 $156
Settlement payable1,869
 3,990
Customer collateral (Note 4 and Note 9)1,698
 1,648
Accrued compensation and benefits573
 796
Client incentives4,376
 3,997
Accrued liabilities1,998
 1,625
Current maturities of debt (Note 8)3,999
 0
Accrued litigation (Note 14)1,268
 1,203
Total current liabilities15,942
 13,415
Long-term debt (Note 8)13,893
 16,729
Deferred tax liabilities4,796
 4,807
Other liabilities3,604
 2,939
Total liabilities38,235
 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, none issued (the “class A equivalent preferred stock”) (Note 10)0
 0
Series B convertible participating preferred stock, 2 shares issued and outstanding at March 31, 2020 and September 30, 2019 (the “UK&I preferred stock”) (Note 5 and Note 10)2,285
 2,285
Series C convertible participating preferred stock, 3 shares issued and outstanding at March 31, 2020 and September 30, 2019 (the “Europe preferred stock”) (Note 5 and Note 10)3,177
 3,177
Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 1,693 and 1,718 shares issued and outstanding at March 31, 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 March 31, 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 March 31, 2020 and September 30, 2019 (Note 10)0
 0
Right to recover for covered losses (Note 5)(184) (171)
Additional paid-in capital16,385
 16,541
Accumulated income13,366
 13,502
Accumulated other comprehensive income (loss), net:   
Investment securities6
 6
Defined benefit pension and other postretirement plans(199) (192)
Derivative instruments78
 199
Foreign currency translation adjustments(329) (663)
Total accumulated other comprehensive income (loss), net(444) (650)
Total equity34,585
 34,684
Total liabilities and equity$72,820
 $72,574

Table of Contents
VISA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 Three Months Ended
December 31,
 20202019
 (in millions, except per share data)
Net revenues$5,687 $6,054 
Operating Expenses
Personnel981 982 
Marketing205 274 
Network and processing173 181 
Professional fees83 106 
Depreciation and amortization197 182 
General and administrative203 313 
Litigation provision1 0 
Total operating expenses1,843 2,038 
Operating income3,844 4,016 
Non-operating Income (Expense)
Interest expense, net(136)(111)
Investment income and other40 69 
Total non-operating income (expense)(96)(42)
Income before income taxes3,748 3,974 
Income tax provision622 702 
Net income$3,126 $3,272 
Basic Earnings Per Share
Class A common stock$1.42 $1.46 
Class B common stock$2.31 $2.37 
Class C common stock$5.69 $5.85 
Basic Weighted-average Shares Outstanding
Class A common stock1,694 1,713 
Class B common stock245 245 
Class C common stock11 11 
Diluted Earnings Per Share
Class A common stock$1.42 $1.46 
Class B common stock$2.31 $2.37 
Class C common stock$5.68 $5.84 
Diluted Weighted-average Shares Outstanding
Class A common stock2,200 2,240 
Class B common stock245 245 
Class C common stock11 11 
 Three Months Ended
March 31,		 Six Months Ended
March 31,
 2020 2019 2020 2019
 (in millions, except per share data)
Net revenues$5,854
 $5,494
 $11,908
 $11,000
        
Operating Expenses       
Personnel940
 894
 1,922
 1,701
Marketing235
 241
 509
 517
Network and processing183
 171
 364
 344
Professional fees103
 101
 209
 192
Depreciation and amortization192
 160
 374
 319
General and administrative269
 264
 582
 540
Litigation provision (Note 14)8
 22
 8
 29
Total operating expenses1,930
 1,853
 3,968
 3,642
Operating income3,924
 3,641
 7,940
 7,358
        
Non-operating Income (Expense)       
Interest expense, net(118) (140) (229) (285)
Investment income and other23
 176
 92
 234
Total non-operating income (expense)(95) 36
 (137) (51)
Income before income taxes3,829
 3,677
 7,803
 7,307
Income tax provision (Note 13)745
 700
 1,447
 1,353
Net income$3,084
 $2,977
 $6,356
 $5,954
        
Basic Earnings Per Share (Note 11)       
Class A common stock$1.39
 $1.31
 $2.85
 $2.61
Class B common stock$2.25
 $2.13
 $4.62
 $4.25
Class C common stock$5.54
 $5.23
 $11.40
 $10.44
        
Basic Weighted-average Shares Outstanding (Note 11)       
Class A common stock1,703
 1,748
 1,708
 1,754
Class B common stock245
 245
 245
 245
Class C common stock11
 12
 11
 12
        
Diluted Earnings Per Share (Note 11)       
Class A common stock$1.38
 $1.31
 $2.85
 $2.61
Class B common stock$2.25
 $2.13
 $4.62
 $4.25
Class C common stock$5.54
 $5.23
 $11.38
 $10.42
        
Diluted Weighted-average Shares Outstanding (Note 11)       
Class A common stock2,228
 2,279
 2,234
 2,285
Class B common stock245
 245
 245
 245
Class C common stock11
 12
 11
 12
See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
5

Table of Contents


VISA INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
 Three Months Ended
December 31,
 20202019
 (in millions)
Net income$3,126 $3,272 
Other comprehensive income (loss), net of tax:
Investment securities:
Net unrealized gain (loss)(1)0 
Defined benefit pension and other postretirement plans:
Net unrealized actuarial gain (loss) and prior service credit (cost)(1)(1)
Income tax effect1 0 
Reclassification adjustments3 4 
Income tax effect(1)(1)
Derivative instruments:
Net unrealized gain (loss)(297)(188)
Income tax effect63 39 
Reclassification adjustments(18)(2)
Income tax effect5 1 
Foreign currency translation adjustments1,046 483 
Other comprehensive income (loss), net of tax800 335 
Comprehensive income$3,926 $3,607 

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
6
 Three Months Ended
March 31,		 Six Months Ended
March 31,
 2020 2019 2020 2019
 (in millions)
Net income$3,084
 $2,977
 $6,356
 $5,954
Other comprehensive income (loss), net of tax:       
Investment securities:       
Net unrealized gain (loss)5
 7
 5
 15
Income tax effect(1) (2) (1) (4)
Reclassification adjustments(2) 0
 (2) 0
Defined benefit pension and other postretirement plans:       
Net unrealized actuarial gain (loss) and prior service credit (cost)3
 0
 2
 (7)
Income tax effect(1) 0
 (1) 1
Reclassification adjustments2
 0
 6
 0
Income tax effect0
 0
 (1) 0
Derivative instruments:       
Net unrealized gain (loss)47
 59
 (141) 97
Income tax effect(8) (13) 31
 (23)
Reclassification adjustments(13) (22) (15) (47)
Income tax effect3
 4
 4
 9
Foreign currency translation adjustments(139) (394) 344
 (681)
Other comprehensive income (loss), net of tax(104) (361) 231
 (640)
Comprehensive income$2,980
 $2,616
 $6,587
 $5,314

Table of Contents


VISA INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
Three Months Ended December 31, 2020
 Preferred StockCommon StockPreferred StockRight to Recover for Covered LossesAdditional
Paid-In Capital		Accumulated
Income		Accumulated
Other
Comprehensive
Income (Loss), Net		Total
Equity
 Series ASeries BSeries CClass AClass BClass C
 (in millions, except per share data)
Balance as of September 30, 20200 (1)2 3 1,683 245 11 $5,086 $(39)$16,721 $14,088 $354 $36,210 
Net income3,126 3,126 
Other comprehensive income (loss), net of tax800 800 
Comprehensive income3,926 
Adoption of new accounting standards3 3 
VE territory covered losses incurred(10)(10)
Recovery through conversion rate adjustment(15)15 — 
Conversion of series A preferred stock upon sales into public market0 (1)20 (1,388)1,388 — 
Conversion of class C common stock upon sales into public market0 (1)0 (1)— 
Vesting of restricted stock and performance-based shares3 — 
Share-based compensation, net of forfeitures122 122 
Restricted stock and performance-based shares settled in cash for taxes(1)(134)(134)
Cash proceeds from issuance of class A common stock under employee equity plans0 (1)61 61 
Cash dividends declared and paid, at a quarterly amount of $0.32 per class A common stock(703)(703)
Repurchase of class A common stock(9)(95)(1,701)(1,796)
Balance as of December 31, 20200 (1)2 3 1,696 245 11 $3,683 $(34)$18,063 $14,813 $1,154 $37,679 
 Three Months Ended March 31, 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 December 31, 20192
 3
 1,709
 245
 11
 $5,462
 $(175) $16,424
 $13,899
 $(340) $35,270
Net income                3,084
   3,084
Other comprehensive income (loss), net of tax                  (104) (104)
Comprehensive income                    2,980
VE territory covered losses incurred (Note 5)            (9)       (9)
Conversion of class C common stock upon sales into public market    2
   0
(1) 
          —
Vesting of restricted stock and performance-based shares    0
(1) 
              —
Share-based compensation, net of forfeitures (Note 12)              99
     99
Restricted stock and performance-based shares settled in cash for taxes    0
(1) 
        (8)     (8)
Cash proceeds from issuance of common stock under employee equity plans    0
(1) 
        54
     54
Cash dividends declared and paid, at a quarterly amount of $0.30 per class A share (Note 10)                (668)   (668)
Repurchase of class A common stock (Note 10)    (18)         (184) (2,949)   (3,133)
Balance as of March 31, 20202
 3
 1,693
 245
 11
 $5,462
 $(184) $16,385
 $13,366
 $(444) $34,585
(1)Increase, decrease or balance is less than one million shares.
(1)
Increase or decrease is less than one million shares.



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

7

Table of Contents





VISA INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)
(UNAUDITED)
Three Months Ended December 31, 2019
 Preferred StockCommon StockPreferred StockRight to Recover for Covered LossesAdditional
Paid-In Capital		Accumulated
Income		Accumulated
Other
Comprehensive
Income (Loss), Net		Total
Equity
 Series BSeries CClass AClass BClass C
 (in millions, except per share data)
Balance as of September 30, 20192 3 1,718 245 11 $5,462 $(171)$16,541 $13,502 $(650)$34,684 
Net income3,272 3,272 
Other comprehensive income (loss), net of tax335 335 
Comprehensive income3,607 
Adoption of new accounting standards25 (25)— 
VE territory covered losses incurred(4)(4)
Conversion of class C common stock upon sales into public market1 0 (1)— 
Vesting of restricted stock and performance-based shares3 — 
Share-based compensation, net of forfeitures116 116 
Restricted stock and performance-based shares settled in cash for taxes(1)(147)(147)
Cash proceeds from issuance of class A common stock under employee equity plans1 55 55 
Cash dividends declared and paid, at a quarterly amount of $0.30 per class A common stock(671)(671)
Repurchase of class A common stock(13)(141)(2,229)(2,370)
Balance as of December 31, 20192 3 1,709 245 11 $5,462 $(175)$16,424 $13,899 $(340)$35,270 
 Six Months Ended March 31, 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, 20192
 3
 1,718
 245
 11
 $5,462
 $(171) $16,541
 $13,502
 $(650) $34,684
Net income                6,356
   6,356
Other comprehensive income (loss), net of tax                  231
 231
Comprehensive income                    6,587
Adoption of new accounting standards (Note 1)                25
 (25) 0
VE territory covered losses incurred (Note 5)            (13)       (13)
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)              215
     215
Restricted stock and performance-based shares settled in cash for taxes    (1)         (155)     (155)
Cash proceeds from issuance of common stock under employee equity plans    1
         109
     109
Cash dividends declared and paid, at a quarterly amount of $0.30 per class A share (Note 10)                (1,339)   (1,339)
Repurchase of class A common stock (Note 10)    (31)         (325) (5,178)   (5,503)
Balance as of March 31, 20202
 3
 1,693
 245
 11
 $5,462
 $(184) $16,385
 $13,366
 $(444) $34,585
(1)Increase or decrease is less than one million shares.
(1)
Increase or decrease is less than one million shares.










VISA INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)
(UNAUDITED)
 Three Months Ended March 31, 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 December 31, 20182
 3
 1,754
 245
 12
 $5,464
 $(92) $16,540
 $11,908
 $275
 $34,095
Net income                2,977
   2,977
Other comprehensive income (loss), net of tax                  (361) (361)
Comprehensive income                    2,616
Adoption of new accounting standards (Note 1)                (8)   (8)
VE territory covered losses incurred (Note 5)            (71)       (71)
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 12)              111
     111
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    0
(1) 
        41
     41
Cash dividends declared and paid, at a quarterly amount of $0.25 per class A share (Note 10)                (569)   (569)
Repurchase of class A common stock (Note 10)    (14)         (143) (1,795)   (1,938)
Balance as of March 31, 20192
 3
 1,741
 245
 12
 $5,464
 $(163) $16,547
 $12,513
 $(86) $34,275
(1)
Increase or decrease is less than one million shares.




VISA INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)
(UNAUDITED)
 Six Months Ended March 31, 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, 20182
 3
 1,768
 245
 12
 $5,470
 $(7) $16,678
 $11,318
 $547
 $34,006
Net income                5,954
   5,954
Other comprehensive income (loss), net of tax                  (640) (640)
Comprehensive income                    5,314
Adoption of new accounting standards (Note 1)            
   385
 7
 392
VE territory covered losses incurred (Note 5)            (162)       (162)
Recovery through conversion rate adjustment (Note 5 and Note 10)          (6) 6
       —
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)    


        211
     211
Restricted stock and performance-based shares settled in cash for taxes    (1)         (103)     (103)
Cash proceeds from issuance of common stock under employee equity plans    1
         89
     89
Cash dividends declared and paid, at a quarterly amount of $0.25 per class A share (Note 10)                (1,141)   (1,141)
Repurchase of class A common stock (Note 10)    (31)         (328) (4,003)   (4,331)
Balance as of March 31, 20192
 3
 1,741
 245
 12
 $5,464
 $(163) $16,547
 $12,513
 $(86) $34,275
(1)
Increase or decrease is less than one million shares.





See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
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VISA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
March 31,		 Three Months Ended
December 31,
2020 2019 20202019
(in millions) (in millions)
Operating Activities   Operating Activities
Net income$6,356

$5,954
Net income$3,126 $3,272 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:   Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Client incentives (Note 3)3,453

2,934
Share-based compensation (Note 12)215

211
Client incentivesClient incentives1,858 1,748 
Share-based compensationShare-based compensation122 116 
Depreciation and amortization of property, equipment, technology and intangible assets374

319
Depreciation and amortization of property, equipment, technology and intangible assets197 182 
Deferred income taxes(37)
256
Deferred income taxes5 (47)
VE territory covered losses incurred (Note 5)(13)
(162)
VE territory covered losses incurredVE territory covered losses incurred(10)(4)
Other(84)
(106)Other25 (50)
Change in operating assets and liabilities:




Change in operating assets and liabilities:
Settlement receivable1,642

(23)Settlement receivable(244)(183)
Accounts receivable38

(203)Accounts receivable(108)(107)
Client incentives(4,323)
(3,142)Client incentives(1,485)(1,943)
Other assets(496)
(245)Other assets235 123 
Accounts payable14

(48)Accounts payable(39)(12)
Settlement payable(2,165)
(38)Settlement payable194 218 
Accrued and other liabilities303

170
Accrued and other liabilities(357)136 
Accrued litigation (Note 14)65

(519)
Accrued litigationAccrued litigation(6)426 
Net cash provided by (used in) operating activities5,342

5,358
Net cash provided by (used in) operating activities3,513 3,875 
Investing Activities   Investing Activities
Purchases of property, equipment and technology(407)
(313)Purchases of property, equipment and technology(160)(191)
Investment securities:



Investment securities:
Purchases(499)
(1,806)Purchases(1,315)(400)
Proceeds from maturities and sales3,420

2,038
Proceeds from maturities and sales2,163 1,202 
Acquisitions, net of cash acquired(77)
0
Acquisitions, net of cash acquired(75)(77)
Purchases of / contributions to other investments(30) (236)Purchases of / contributions to other investments(18)(9)
Proceeds / distributions from other investments2
 10
Other investing activities32

(89)Other investing activities44 37 
Net cash provided by (used in) investing activities2,441

(396)Net cash provided by (used in) investing activities639 562 
Financing Activities   Financing Activities
Repurchase of class A common stock (Note 10)(5,503) (4,331)
Dividends paid (Note 10)(1,339) (1,141)
Proceeds from issuance of commercial paper (Note 8)1,001
 0
Cash proceeds from issuance of common stock under employee equity plans109
 89
Repurchase of class A common stockRepurchase of class A common stock(1,796)(2,370)
Repayments of debtRepayments of debt(3,000)0 
Dividends paidDividends paid(703)(671)
Cash proceeds from issuance of class A common stock under employee equity plansCash proceeds from issuance of class A common stock under employee equity plans61 55 
Restricted stock and performance-based shares settled in cash for taxes(155) (103)Restricted stock and performance-based shares settled in cash for taxes(134)(147)
Net cash provided by (used in) financing activities(5,887) (5,486)Net cash provided by (used in) financing activities(5,572)(3,133)
Effect of exchange rate changes on cash and cash equivalents88
 (171)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalentsEffect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents304 127 
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents1,984
 (695)Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents(1,116)1,431 
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period (Note 4)10,832
 10,977
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period (Note 4)$12,816
 $10,282
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of periodCash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period19,171 10,832 
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of periodCash, cash equivalents, restricted cash and restricted cash equivalents at end of period$18,055 $12,263 
Supplemental Disclosure   Supplemental Disclosure
Income taxes paid, net of refunds$1,691
 $1,381
Cash paid for income taxes, netCash paid for income taxes, net$252 $345 
Interest payments on debt$269
 $269
Interest payments on debt$281 $234 
Accruals related to purchases of property, equipment and technology$42
 $51
Accruals related to purchases of property, equipment and technology$13 $66 
 

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1—Summary of Significant Accounting Policies
Organization. Visa Inc. (“Visa” or the “Company”) is a global payments technology company that enables fast,innovative, secure and reliable electronic payments across more than 200 countries and territories. Visa and its wholly-owned consolidated subsidiaries, including Visa U.S.A. Inc. (“Visa U.S.A.”), Visa International Service Association (“Visa International”), Visa Worldwide Pte. Limited, Visa Europe Limited (“Visa Europe”), Visa Canada Corporation (“Visa Canada”), Visa Technology & Operations LLC and CyberSource Corporation, operate one of the world’s largest electronic payments networksnetwork — VisaNet — which facilitates authorization, clearing and settlement of payment transactions and enables the Company to provide its financial institution and merchantseller clients a wide range of products, platforms and value-addedvalue added services. Visa is not a financial institution and does not issue cards, extend credit or set rates and fees for account holders onof Visa products. In most cases, account holder and merchant relationships belong to, and are managed by, Visa’s financial institution clients.
Consolidation and basis of presentation. The accompanying unaudited consolidated financial statements include the accounts of Visa and its consolidated entities and are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company consolidates its majority-owned and controlled entities, including variable interest entities (“VIEs”) for which the Company is the primary beneficiary. The Company’s investments in VIEs have not been material to its unaudited consolidated financial statements as of and for the periods presented. All significant intercompany accounts and transactions are eliminated in consolidation.
The accompanying unaudited consolidated financial statements are presented in accordance with the U.S. Securities and Exchange Commission (“SEC”) requirements for Quarterly Reports on Form 10-Q and, consequently, do not include all of the annual disclosures required by U.S. GAAP. Reference should be made to the Visa Annual Report on Form 10-K for the year ended September 30, 20192020 for additional disclosures, including a summary of the Company’s significant accounting policies.
In the opinion of management, the accompanying unaudited consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods presented.
Use of estimates. The preparation of the accompanying unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and reported amounts of revenues and expenses during the reporting period. These estimates may change, as new events occur and additional information is obtained, and will be recognized in the unaudited consolidated financial statements in the period in which such changes occur. Future actual results could differ materially from these estimates. 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 impactscontinues 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.Pronouncements
In FebruaryJune 2016, the FASBFinancial Accounting Standards Board (“FASB”) issued ASU 2016-02,Accounting Standards Board Update (“ASU”) 2016-13, which requires the measurement and recognition of leaseexpected credit losses for financial assets and lease liabilities arising from operating leases on the balance sheet. Subsequently, the FASB also issued a series of amendments to this new leases standard that address the transition methods available and clarify the guidance for lessor costs andcertain other aspects of the new leases standard.instruments held at amortized cost. The Company adopted the standard effective October 1, 20192020 using the modified retrospective transition method with comparative 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 contains a lease, lease classification and capitalization of initial direct costs.previous applicable guidance. The adoption did not have a material impact on the consolidated financial statements.
In accordance with ASU 2016-02,2016-13, the Company determines ifuses a forward-looking expected credit loss model for financial instruments measured at amortized cost. For available-for-sale debt securities, when credit loss indicators exist and a discounted cash flow approach results in a credit loss, the credit loss will be recorded through an 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

allowance rather
12
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

presentthan through an other-than-temporary impairment. In addition to recording the fair value of remaining lease payments overits settlement indemnification liability, under the lease term. For this purpose,new standard, the Company considers only payments that are fixedestimates expected credit losses and determinable atrecognizes an allowance for those credit losses related to its settlement indemnification obligations.
In January 2017, the time of commencement. As a majorityFASB issued ASU 2017-04, which simplifies the accounting for goodwill impairments by eliminating Step 2 from the goodwill impairment test. Under the amendments in ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of the Company’s leases doreporting unit with its carrying amount, which is Step 1 of the goodwill impairment test. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, not provide an implicit rate,to exceed the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present valuetotal amount of lease payments. The ROU asset also includes any lease payments made priorgoodwill allocated 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.reporting unit. The Company does not record a ROU asset and corresponding liability for leases with terms of 12 months or less.
adopted the standard effective October 1, 2020. 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 liabilitiesadoption had no impact 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.financial statements.
In FebruaryAugust 2018, the FASB issued ASU 2018-02,2018-13, which allows a reclassification from accumulated other comprehensive income to retained earningsmodifies the disclosure requirements 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”).fair value measurements by removing, modifying or adding certain disclosures. The Company adopted the ASUthis standard effective October 1, 2019.2020. 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 January 2020, the FASB issued ASU 2020-01, which clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the fair value measurement alternative. The amendments in the ASU are effective for the Company on October 1, 2021. The adoption is not expected to have a material impact on the consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, which 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
PendingTerminated Acquisition. On January 13, 2020, the Company entered into a definitive agreement to acquire12, 2021, Visa and Plaid Inc. for $5.3 billion. The Company 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 ofmutually terminated their merger agreement announced on January 13, 2020. See Note 13—Legal Matters.

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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Note 3—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 six months ended MarchDecember 31, 2020 and 2019:
Three Months Ended
December 31,
20202019
(in millions)
Service revenues$2,677 $2,555 
Data processing revenues3,033 2,864 
International transaction revenues1,451 2,018 
Other revenues384 365 
Client incentives(1,858)(1,748)
Net revenues$5,687 $6,054 
 Three Months Ended
March 31,		 Six Months Ended
March 31,
 2020 2019 2020 2019
 (in millions)
Service revenues$2,623
 $2,417
 $5,178
 $4,759
Data processing revenues2,711
 2,432
 5,575
 4,902
International transaction revenues1,833
 1,796
 3,851
 3,647
Other revenues392
 327
 757
 626
Client incentives(1,705) (1,478) (3,453) (2,934)
Net revenues$5,854
 $5,494
 $11,908
 $11,000
 Three Months Ended
March 31,		 Six Months Ended
March 31,
 2020 2019 2020 2019
 (in millions)
U.S.$2,650
 $2,479
 $5,367
 $4,987
International3,204
 3,015
 6,541
 6,013
Net revenues$5,854
 $5,494
 $11,908
 $11,000

Three Months Ended
December 31,
20202019
(in millions)
U.S.$2,667 $2,717 
International3,020 3,337 
Net revenues$5,687 $6,054 
At December 31, 2020 and September 30, 2020, deferred revenue included in accrued liabilities on the consolidated balance sheets was $668 million and $533 million, respectively.
Note 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.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
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:
 March 31,
2020		 September 30,
2019
 (in millions)
Cash and cash equivalents$9,740
 $7,838
Restricted cash and restricted cash equivalents:   
U.S. litigation escrow1,264
 1,205
Customer collateral1,698
 1,648
Prepaid expenses and other current assets114
 141
Cash, cash equivalents, restricted cash and restricted cash equivalents$12,816
 $10,832

December 31,
2020		September 30,
2020
(in millions)
Cash and cash equivalents$15,032 $16,289 
Restricted cash and restricted cash equivalents:
U.S. litigation escrow894 901 
Customer collateral1,993 1,850 
Prepaid expenses and other current assets136 131 
Cash, cash equivalents, restricted cash and restricted cash equivalents$18,055 $19,171 
Note 5—U.S. and Europe Retrospective Responsibility Plans
U.S. Retrospective Responsibility Plan
Under the terms of the U.S. retrospective responsibility plan, the Company maintains an escrow account from which settlements of, or judgments in, certain litigation 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.

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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

On December 13, 2019, the 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 received on December 27, 2019, and deposited into the Company’s litigation escrow account. The deposit into the litigation escrow account and reestablishment of a prior accrual to address opt-out claims was recorded during the six months ended March 31, 2020. The accrual related to the U.S. covered litigation could be either higher or lower than the U.S. litigation escrow account balance. See Note 14—13—Legal Matters.
The following table sets forth the changes in the restricted cash equivalents—U.S. litigation escrow account:
Three Months Ended
December 31,
20202019
 (in millions)
Balance at beginning of period$901 $1,205 
Return of takedown payment to the litigation escrow account0 467 
Payments to opt-out merchants(1) and interest earned on escrow funds
(7)(38)
Balance at end of period$894 $1,634 
 Six Months Ended
March 31,
 2020 2019
 (in millions)
Balance at beginning of period$1,205
 $1,491
Return of takedown payment to the litigation escrow account467
 0
Payments to class plaintiffs’ settlement fund(1)
0
 (600)
Payments to opt-out merchants(1) and interest earned on escrow funds
(408) 8
Balance at end of period$1,264
 $899
(1)
These payments are associated with the Interchange Multidistrict Litigation. See Note 14—(1)These payments are associated with the Interchange Multidistrict Litigation. See Note 13—Legal Matters.
Europe Retrospective Responsibility Plan
Visa Inc., Visa International and Visa Europe are parties to certain existing and potential litigation relating to the setting of multilateral interchange fee rates in the Visa Europe territory (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 months ended December 31, 2020, the Company recovered $15 million of VE territory covered losses through adjustments to the class A common stock conversion rates applicable to the UK&I and Europe preferred stock.
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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 stockholders’ equity during the three months ended December 31, 2020.
Preferred StockRight to Recover for Covered Losses
UK&IEurope
(in millions)
Balance as of September 30, 2020$1,106 $1,543 $(39)
VE territory covered losses incurred(1)
0 0 (10)
Recovery through conversion rate adjustment(9)(6)15 
Balance as of December 31, 2020$1,097 $1,537 $(34)
(1)VE territory covered losses incurred reflect settlements with merchants and additional legal costs. See Note 14—13—Legal Matters. There were no adjustments to the conversion rates during the six months endedMarch 31, 2020.

The following table 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 MarchDecember 31, 2020 and September 30, 2019:2020:
December 31, 2020September 30, 2020
As-converted Value of Preferred Stock(1),(2)
Book Value of Preferred Stock(1)
As-converted Value of Preferred Stock(1),(3)
Book Value of Preferred Stock(1)
(in millions)
UK&I preferred stock$3,455 $1,097 $3,168 $1,106 
Europe preferred stock4,732 1,537 4,331 1,543 
Total8,187 2,634 7,499 2,649 
Less: right to recover for covered losses(34)(34)(39)(39)
Total recovery for covered losses available$8,153 $2,600 $7,460 $2,610 
(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 December 31, 2020; (b) 6.368 and 6.853, the class A common stock conversion rate applicable to the UK&I and Europe preferred stock as of December 31, 2020, respectively; and (c) $218.73, Visa’s class A common stock closing stock price as of December 31, 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, 2020; (b) 6.387 and 6.861, the class A common stock conversion rate applicable to the UK&I and Europe preferred stock as of September 30, 2020, respectively; and (c) $199.97, Visa’s class A common stock closing stock price as of September 30, 2020.
13
 March 31, 2020 September 30, 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)
 (in millions)
UK&I preferred stock$5,170
 $2,285
 $5,519
 $2,285
Europe preferred stock7,062
 3,177
 7,539
 3,177
Total12,232
 5,462
 13,058
 5,462
Less: right to recover for covered losses(184) (184) (171) (171)
Total recovery for covered losses available$12,048
 $5,278
 $12,887
 $5,291
(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 March 31, 2020; (b) 12.936 and 13.884, the class A common stock conversion rate applicable to the UK&I and Europe preferred stock as of March 31, 2020, respectively; and (c) $161.12, Visa’s class A common stock closing stock price as of March 31, 2020.

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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

(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.
Note 6—Fair Value Measurements and Investments
Assets and Liabilities Measured at Fair Value on a Recurring Basis
 
Fair Value Measurements
Using Inputs Considered as
 Level 1 Level 2
 March 31,
2020		 September 30,
2019		 March 31,
2020		 September 30,
2019
 (in millions)
Assets       
Cash equivalents and restricted cash equivalents:       
Money market funds$8,864
 $6,494
    
U.S. government-sponsored debt securities    $0
 $150
Investment securities:       
Marketable equity securities121
 126
    
U.S. government-sponsored debt securities    3,149
 5,592
U.S. Treasury securities205
 675
    
Other current and non-current assets:       
Derivative instruments    768
 437
Total$9,190
 $7,295
 $3,917
 $6,179
Liabilities       
Accrued compensation and benefits:       
Deferred compensation liability$111
 $113
    
Accrued and other liabilities:       
Derivative instruments    $272
 $52
Total$111
 $113
 $272
 $52

There were 0 transfers between Level 1 and Level 2 assets during the six months ended March 31, 2020.
 Fair Value Measurements
Using Inputs Considered as
 Level 1Level 2
 December 31,
2020		September 30,
2020		December 31,
2020		September 30,
2020
 (in millions)
Assets
Cash equivalents and restricted cash equivalents:
Money market funds$10,512 $12,522 $0 $0 
U.S. government-sponsored debt securities0 0 8501,469 
U.S. Treasury securities2,050 650 0 0 
Investment securities:
Marketable equity securities184 148 0 0 
U.S. government-sponsored debt securities0 0 1,684 2,582 
U.S. Treasury securities1,302 1,253 0 0 
Other current and non-current assets:
Money market funds2 0 0 0 
Derivative instruments0 0 381 512 
Total$14,050 $14,573 $2,915 $4,563 
Liabilities
Accrued compensation and benefits:
Deferred compensation liability$169 $135 $0 $0 
Accrued and other liabilities:
Derivative instruments0 0 355 181 
Total$169 $135 $355 $181 
Level 1 assets. Money market funds, marketable equity securities and U.S. Treasury securities are classified as Level 1 within the fair value hierarchy, as fair value is based on unadjusted quoted prices in active markets.markets for identical assets and liabilities. The Company’s deferred compensation liability is measured at fair value based on marketable equity securities held under the deferred compensation plan.
Level 2 assets and liabilities. The fair value of U.S. government-sponsored debt securities, as provided by third-party pricing vendors, is based on quoted prices in active markets for similar, not identical, assets. 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 six months ended March 31, 2020.
U.S. government-sponsored debt securities and U.S. Treasury securities. TheAs of December 31, 2020 and September 30, 2020, the Company considers U.S. government-sponsored debt securities and U.S. Treasury securities to be available-for-sale and held $3.4$3.0 billion and $6.3$3.8 billion of these investment securities, as of March 31, 2020 and September 30, 2019, respectively. All of the Company’s long-term available-for-sale investment securities are due within one to five years.


16
Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

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.
14
Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
During the three months ended MarchDecember 31, 2020 the Company recorded 0 materialand 2019, upward or downward adjustments. During the six months ended March 31, 2020,adjustments of $14 million and $9 million, of upward adjustments and 0 material downward adjustmentsrespectively, were included in the carrying value of non-marketable equity securities.securities accounted for under the fair value measurement alternative. The three months ended December 31, 2020 also included downward adjustments of $2 million. During the three and six months ended MarchDecember 31, 2020 and 2019, there werewas 0 impairments.impairment recognized. The following table summarizes the total carrying value of the Company’s non-marketable equity securities held as of MarchDecember 31, 2020 including cumulative unrealized gains and losses:
 March 31, 2020
 (in millions)
Initial cost basis$611
Upward adjustments119
Downward adjustments (including impairment)(5)
Carrying amount, end of period$725
December 31,
2020
(in millions)
Initial cost basis$849 
Adjustments:
Upward adjustments226 
Downward adjustments (including impairment)(13)
Carrying amount, end of period$1,062
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, 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 Company completed its annual impairment review of its indefinite-lived intangible assets and goodwill as of February 1, 2020, and concluded that there was 0 impairment. No recent events or changes in circumstances indicate that impairment existed at MarchDecember 31, 2020.
Gains and Losses on Marketable and Non-marketable Equity Securities
Gains and losses on the Company’s equity securities are summarized below.
 Three Months Ended
March 31,		 Six Months Ended
March 31,
 2020 2019 2020 2019
 (in millions)
Net gain (loss) on equity securities sold during the period$1
 $15
 $5
 $15
Unrealized gain (loss) on equity securities held as of the end of the period(23) 79
 (9) 59
Total gain (loss) recognized in non-operating income (expense), net$(22) $94
 $(4) $74

Other Fair Value Disclosures
Long-term debt.Debt. Debt instruments are measured at amortized cost on the Company’s unaudited 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. TheAs of December 31, 2020, the carrying value and estimated fair value of long-term debt was $16.9$21.1 billion and $18.6$23.8 billion,

17
Table respectively. As of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

respectively, as of March 31, 2020. TheSeptember 30, 2020, the carrying value and estimated fair value of long-term debt was $16.7$24.1 billion and $18.4$26.6 billion, respectively, as of September 30, 2019.respectively.
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 MarchDecember 31, 2020, but disclosure of their fair values is required: settlement receivable and payable accounts receivable, commercial paper and customer collateral. The estimated fair value of such instruments at MarchDecember 31, 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.
15
Note 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 March 31, 2020, the Company had no finance leases.
During the three and six months ended March 31, 2020, total operating lease cost was $29 million and $55 million, respectively. At March 31, 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 March 31, 2020, the present value of future minimum lease payments was as follows:
  March 31, 2020
  (in millions)
Remainder of 2020 $48
2021 112
2022 96
2023 89
2024 76
Thereafter 214
Total undiscounted lease payments 635
Less: imputed interest (48)
Present value of lease liabilities $587

At March 31, 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 3 to 15 years.

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Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Note 8—7—Debt
The Company had outstanding debt as follows:
December 31,
2020		September 30,
2020
Effective Interest Rate(1)
(in millions, except percentages)
2.20% Senior Notes due December 2020$0 $3,000 2.30 %
2.15% Senior Notes due September 20221,000 1,000 2.30 %
2.80% Senior Notes due December 20222,250 2,250 2.89 %
3.15% Senior Notes due December 20254,000 4,000 3.26 %
1.90% Senior Notes due April 20271,500 1,500 2.02 %
0.75% Senior Notes due August 2027500 500 0.84 %
2.75% Senior Notes due September 2027750 750 2.91 %
2.05% Senior Notes due April 20301,500 1,500 2.13 %
1.10% Senior Notes due February 20311,000 1,000 1.20 %
4.15% Senior Notes due December 20351,500 1,500 4.23 %
2.70% Senior Notes due April 20401,000 1,000 2.80 %
4.30% Senior Notes due December 20453,500 3,500 4.37 %
3.65% Senior Notes due September 2047750 750 3.73 %
2.00% Senior Notes due August 20501,750 1,750 2.09 %
Total debt21,000 24,000 
Unamortized discounts and debt issuance costs(173)(178)
Hedge accounting fair value adjustments(2)
228 248 
Total carrying value of debt$21,055 $24,070 
Reported as:
Current maturities of debt$0 $2,999 
Long-term debt21,055 21,071 
Total carrying value of debt$21,055 $24,070 
 March 31,
2020		 September 30,
2019		 
Effective Interest Rate(1)
 (in millions, except percentages)
Commercial paper$1,002
 $0
 1.55%
2.20% Senior Notes due December 20203,000
 3,000
 2.30%
2.15% Senior Notes due September 20221,000
 1,000
 2.30%
2.80% Senior Notes due December 20222,250
 2,250
 2.89%
3.15% Senior Notes due December 20254,000
 4,000
 3.26%
2.75% Senior Notes due September 2027750
 750
 2.91%
4.15% Senior Notes due December 20351,500
 1,500
 4.23%
4.30% Senior Notes due December 20453,500
 3,500
 4.37%
3.65% Senior Notes due September 2047750
 750
 3.73%
Total debt17,752
 16,750
  
Unamortized discounts and debt issuance costs(103) (108)  
Hedge accounting fair value adjustments(2)
243
 87
  
Total carrying value of debt$17,892
 $16,729
  
      
Reported as:     
Current maturities of debt$3,999
 $0
  
Long-term debt13,893
 16,729
  
Total carrying value of debt$17,892
 $16,729
  

(1)Effective interest rates disclosed do not reflect hedge accounting adjustments.
(1)
(2)Represents the change in fair value of interest rate swap agreements entered into on a portion of outstanding senior notes.
Effective interest rates disclosed do not reflect hedge accounting adjustments.
(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. UnderSenior Notes
During 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. At Marchthree months ended December 31, 2020, the commercial paper outstanding had remaining maturitiesCompany repaid $3.0 billion of less than 12 months.
Senior Notes
In April 2020, the Company issued fixed-rateprincipal upon maturity of its senior notes in a public offering in 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,due December 14, 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.
Note 9—8—Settlement Guarantee Management
The Company indemnifies its clients for settlement losses suffered due to failure of any other client to fund its settlement obligations in accordance with the Visa operating rules. This indemnification creates settlement risk for the Company due to the difference in timing between the date of a payment transaction and the date of subsequent settlement.
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.

19
Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

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. TheDuring the three months ended December 31, 2020, the Company’s maximum daily settlement exposure was $97.3$97.5 billion and the average daily settlement exposure was $56.7 billion during the six months ended March 31, 2020.$61.2 billion.
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Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
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 MarchDecember 31, 2020 and September 30, 2019,2020, the Company held the following collateral as follows:to manage settlement exposure:

March 31,
2020		 September 30,
2019
 (in millions)
Restricted cash and restricted cash equivalents$1,698
 $1,648
Pledged securities at market value235
 259
Letters of credit1,300
 1,293
Guarantees508
 477
Total$3,741
 $3,677

December 31,
2020		September 30,
2020
 (in millions)
Restricted cash and restricted cash equivalents$1,993 $1,850 
Pledged securities at market value282 228 
Letters of credit1,377 1,306 
Guarantees714 717 
Total$4,366 $4,101 
Note 10—9—Stockholders’ Equity
As-converted class A common stock. The following table 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:basis were as follows:
December 31, 2020September 30, 2020
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)
Series A preferred stock0 (2)100.0000 15 0 (2)100.0000 35 
UK&I preferred stock2 6.3680 16 2 6.3870 16 
Europe preferred stock3 6.8530 22 3 6.8610 22 
Class A common stock(3)
1,696 —1,696 1,683 — 1,683 
Class B common stock245 1.6228 (4)398 245 1.6228 (4)398 
Class C common stock11 4.0000 43 11 4.0000 43 
Total2,190 2,197 
 March 31, 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 stock2
 12.9360
 32
 2
 12.9360
 32
Europe preferred stock3
 13.8840
 44
 3
 13.8840
 44
Class A common stock(2)
1,693
 —
 1,693
 1,718
 —
 1,718
Class B common stock245
 1.6228
(3) 
398
 245
 1.6228
(3) 
398
Class C common stock11
 4.0000
 43
 11
 4.0000
 45
Total    2,210
     2,237

(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)The number of shares outstanding was less than one million.
(3)Class A common stock shares outstanding reflect repurchases that settled on or before December 31, 2020 and September 30, 2020.
(4)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. As-converted class A common stock is calculated based on unrounded numbers.
(2)
Class A common stock shares outstanding reflect repurchases that settled on or before March 31, 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. There were no conversion rate adjustments in the six months ended March 31, 2020. See Note 5—U.S. and Europe Retrospective Responsibility Plans.
17


20
Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

The following table presents the reduction in as-converted UK&I and Europe preferred stock after the Company recovered VE territory covered losses through conversion rate adjustments in the three months ended December 31, 2020. There were no conversion rate adjustments in the three months ended December 31, 2019.
Three Months Ended
December 31, 2020
UK&IEurope
(in millions, except per share data)
Reduction in equivalent number of as-converted shares of class A common stock0 (1)0 (1)
Effective price per share(2)
$209.89 $209.89 
Recovery through conversion rate adjustment$9 $6 
(1)The reduction in equivalent number of shares of class A common stock was less than one million shares.
(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.
Common stock repurchases. The following table presents share repurchases in the open market for the following periods:
Three Months Ended
December 31,
20202019
(in millions, except per share data)
Shares repurchased in the open market(1)
9 13 
Average repurchase price per share(2)
$201.73 $179.27 
Total cost(2)
$1,796 $2,370 
 Three Months Ended
March 31,		 Six Months Ended
March 31,
 2020 2019 2020 2019
 (in millions, except per share data)
Shares repurchased in the open market(1)
18
 14
 31
 31
Average repurchase price per share(2)
$181.11
 $144.94
 $180.31
 $141.08
Total cost(2)
$3,133
 $1,938
 $5,503
 $4,331
(1)Shares repurchased in the open market reflect repurchases that settled during the three months ended December 31, 2020 and 2019. All shares repurchased in the open market have been retired and constitute authorized but unissued shares.
(1)
(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.
Shares repurchased in the open market reflect repurchases that settled during the three and six months ended March 31, 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 2019,2020, the Company’s board of directors authorized an $8.5a $9.5 billion share repurchase program (the “January 2020 Program”) and in January 2020,2021, authorized an additional $9.5$8.0 billion share purchase program. These authorizations have no expiration date. As of MarchDecember 31, 2020, the Company’s January 2020 share repurchase programProgram had remaining authorized funds of $8.1 billion for share repurchase.$3.7 billion. All share repurchase programs authorized prior to January 2020 have been completed.
Dividends. On April 21, 2020,January 26, 2021, the Company’s board of directors declared a quarterly cash dividend of $0.30$0.32 per share of class A common stock (determined in the case of class B and C common stock and series A, UK&I and Europe preferred stock on an as-converted basis). The cash dividend, which will be paid on June 2, 2020,March 1, 2021, to all holders of record as of May 14, 2020. TheFebruary 12, 2021. During the three months ended December 31, 2020 and 2019, the Company declared and paid $668dividends of $703 million and $569$671 million, during the three months ended March 31, 2020 and 2019, respectively and $1.3 billion and $1.1 billion during the six months ended March 31, 2020 and 2019, respectively, in dividends to holders of the Company’s common and preferred stocks.respectively.
Note 11—10—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 10—9—Stockholders’ Equity.
18
Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
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 series A, 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.

21
Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

The following table presents earnings per share for the three months ended March 31, 2020:
 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$2,360
 1,703
 $1.39
 $3,084
 2,228
(3) 
$1.38
Class B common stock552
 245
 $2.25
 $551
 245
 $2.25
Class C common stock61
 11
 $5.54
 $60
 11
 $5.54
Participating securities(4)
111
 Not presented
 Not presented
 $111
 Not presented
 Not presented
Net income$3,084
          
The following table presents earnings per share for the six months ended MarchDecember 31, 2020:
 Basic Earnings Per ShareDiluted Earnings Per Share
Income
Allocation
(A)(1)
Weighted-
Average
Shares
Outstanding (B)
Earnings per
Share =
(A)/(B)(2)
Income
Allocation
(A)(1)
Weighted-
Average
Shares
Outstanding (B)		 
Earnings per
Share =
(A)/(B)(2)
(in millions, except per share data)
Class A common stock$2,410 1,694 $1.42 $3,126 2,200 (3)$1.42 
Class B common stock567 245 $2.31 $566 245 $2.31 
Class C common stock61 11 $5.69 $61 11 $5.68 
Participating securities(4)
88 Not presentedNot presented$89 Not presentedNot presented
Net income$3,126 
 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$4,866
 1,708
 $2.85
 $6,356
 2,234
(3) 
$2.85
Class B common stock1,135
 245
 $4.62
 $1,134
 245
 $4.62
Class C common stock126
 11
 $11.40
 $125
 11
 $11.38
Participating securities(4)
229
 Not presented
 Not presented
 $229
 Not presented
 Not presented
Net income$6,356
          
The following table presents earnings per share for the three months ended March 31, 2019:
 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$2,287
 1,748
 $1.31
 $2,977
 2,279
(3) 
$1.31
Class B common stock523
 245
 $2.13
 $523
 245
 $2.13
Class C common stock61
 12
 $5.23
 $61
 12
 $5.23
Participating securities(4)
106
 Not presented
 Not presented
 $106
 Not presented
 Not presented
Net income$2,977
          
The following table presents earnings per share for the six months ended MarchDecember 31, 2019:
 Basic Earnings Per ShareDiluted Earnings Per Share
Income
Allocation
(A)(1)
Weighted-
Average
Shares
Outstanding (B)
Earnings per
Share =
(A)/(B)(2)
Income
Allocation
(A)(1)
Weighted-
Average
Shares
Outstanding (B)		 
Earnings per
Share =
(A)/(B)(2)
(in millions, except per share data)
Class A common stock$2,506 1,713 $1.46 $3,272 2,240 (3)$1.46 
Class B common stock583 245 $2.37 $582 245 $2.37 
Class C common stock65 11 $5.85 $65 11 $5.84 
Participating securities(4)
118 Not presentedNot presented$117 Not presentedNot presented
Net income$3,272 
 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$4,577
 1,754
 $2.61
 $5,954
 2,285
(3) 
$2.61
Class B common stock1,044
 245
 $4.25
 $1,043
 245
 $4.25
Class C common stock122
 12
 $10.44
 $122
 12
 $10.42
Participating securities(4)
211
 Not presented
 Not presented
 $211
 Not presented
 Not presented
Net income$5,954
          

(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 months ended December 31, 2020 and 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 months ended December 31, 2020 and 2019, respectively. The weighted-average number of shares of preferred stock included within participating securities was 21 million of as-converted series A preferred stock for the three months ended December 31, 2020, 16 million and 32 million of as-converted UK&I preferred stock for the three months ended December 31, 2020 and 2019, respectively, and 22 million and 44 million of as-converted Europe preferred stock for the three months ended December 31, 2020 and 2019, respectively.

(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 months ended December 31, 2020 and 2019, because their effect would have been dilutive. The computation excludes common stock equivalents of 1 million for the three months ended December 31, 2020 and 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 Company’s series A preferred stock, 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.
22
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL 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 six months ended March 31, 2020 and 400 million for the three and six months ended March 31, 2019. The weighted-average number of shares of as-converted class C common stock used in the income allocation was 44 million for the three and six months ended March 31, 2020 and 47 million for the three and six months ended March 31, 2019. 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 six months ended March 31, 2020 and 2019, and 44 million of as-converted Europe preferred stock for the three and six months ended March 31, 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 six months ended March 31, 2020 and 2019, because their effect would have been dilutive. The computation excludes common stock equivalents of 1 million and 2 million for the three and six months ended March 31, 2020, respectively, and 1 million for the three and six months ended March 31, 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 12—11—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 sixthree months ended MarchDecember 31, 2020:
GrantedWeighted-Average
Grant Date Fair
Value		Weighted-Average
Exercise Price
Non-qualified stock options1,022,430 $39.51 $207.57 
Restricted stock units2,108,933 $207.52 
Performance-based shares(1)
432,714 $229.81 
 Granted 
Weighted-Average
Grant Date Fair
Value
 
Weighted-Average
Exercise Price
Non-qualified stock options1,247,982
 $29.37
 $182.50
Restricted stock units2,264,886
 $183.27
  
Performance-based shares(1)
470,128
 $211.08
  
(1)Represents the maximum number of performance-based shares which could be earned.
(1)
Represents
For the three months ended December 31, 2020 and 2019, the maximum number of performance-based shares which could be earned.
The Company recorded share-based compensation cost related to the EIP of $93$116 million and $106$111 million, respectively, net of estimated forfeitures.

On January 26, 2021, the EIP was amended to extend the termination date from January 31, 2022 to January 26, 2031 and reduce the number of shares authorized for grant from 236 million to 198 million. Additionally, shares available for grant may be either unissued or previously issued shares subsequently acquired by the Company, except that shares withheld for taxes, or shares used to pay the exercise or purchase price of an award, shall not again be available for future grant.
Note 12—Income Taxes
For the three months ended MarchDecember 31, 2020 and 2019, respectively, and $204 million and $201 million for the six months ended March 31, 2020 and 2019, respectively, net of estimated forfeitures, which are adjusted as appropriate.
Note 13—Income Taxes
The effective income tax rates were 19% for17% and 18%, respectively. The difference in the effective tax rates between the three-month periods was primarily due to an $81 million tax benefit recognized during the three and six months ended MarchDecember 31, 2020 and 2019.as a result of the conclusion of audits by taxing authorities.
During the three and six months ended MarchDecember 31, 2020, the Company’s gross unrecognized tax benefits increased by $112 million and $175 million, respectively. The Company’s net unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate, increaseddecreased by $26$6 million and $39$49 million, respectively. The changedecrease in unrecognized tax benefits is primarily relateddue to the recognition of previously unrecognized tax benefits as a result of the conclusion of audits by taxing authorities, partially offset by increases in gross timing differences as well as various tax positions across several jurisdictions. During the three and six months ended MarchDecember 31, 2020 and 2019, there were no significant changes in accrued 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.
In September 2020, the Company accepted a settlement offer related to the examination of Canadian tax returns dating back to fiscal 2003, which was subject to approval by the Tax Court of Canada. On January 21, 2021, the Tax Court of Canada approved the settlement agreement related to the examination. 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.Company’s income tax provisions relatedprovision was already adjusted to among other things, net operating loss carrybacks, alternative minimum tax credits, modifications toreflect the net interest deduction limitations, and technical amendments regardingestimated impact of the income tax depreciation of qualified improvement property placedsettlement in service after December 31, 2017. The CARES Act is not expected to have a material impact on the Company’s financial results.fiscal 2020.

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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Note 14—13—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.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
The litigation accrual is an estimate and is based on management’s understanding of itsthe Company’s 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:
 Six Months Ended
March 31,
 2020 2019
 (in millions)
Balance at beginning of period$1,203
 $1,434
Provision for uncovered legal matters7
 35
Provision for covered legal matters7
 159
Reestablishment of prior accrual related to interchange multidistrict litigation467
 0
Payments for legal matters(416) (714)
Balance at end of period$1,268
 $914

 Three Months Ended
December 31,
 20202019
 (in millions)
Balance at beginning of period$914 $1,203 
Provision for uncovered legal matters1 0 
Provision for covered legal matters10 1 
Reestablishment of prior accrual related to interchange multidistrict litigation0 467 
Payments for legal matters(16)(42)
Balance at end of period$909 $1,629 
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 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 Company’s litigation committee. The total accrual related to the U.S. covered litigation could be either higher or lower than the escrow account balance. See further discussion below under U.S. Covered Litigation and Note 5—U.S. and Europe Retrospective Responsibility Plans.
The following table summarizes the accrual activity related to U.S. covered litigation:
 Six Months Ended
March 31,
 2020 2019
 (in millions)
Balance at beginning of period$1,198
 $1,428
Reestablishment of prior accrual related to interchange multidistrict litigation467
 0
Payments for U.S. covered litigation(414) (600)
Balance at end of period$1,251
 $828


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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL 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 deposit into the litigation escrow account and reestablishment of a prior accrual to address opt-out claims was recorded during the six months ended March 31, 2020. See further discussion below under U.S. Covered Litigation.
 Three Months Ended
December 31,
 20202019
 (in millions)
Balance at beginning of period$888 $1,198 
Reestablishment of prior accrual related to interchange multidistrict litigation0 467 
Payments for U.S. covered litigation(7)(41)
Balance at end of period$881 $1,624 
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 5—U.S. and Europe Retrospective Responsibility Plans.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
The following table summarizes the accrual activity related to VE territory covered litigation:
 Six Months Ended
March 31,
 2020 2019
 (in millions)
Balance at beginning of period$5
 $0
Provision for VE territory covered litigation7
 159
Payments for VE territory covered litigation(1) (98)
Balance at end of period$11
 $61

 Three Months Ended
December 31,
 20202019
(in millions)
Balance at beginning of period$21 $5 
Provision for VE territory covered litigation10 1 
Payments for VE territory covered litigation(9)(1)
Balance at end of period$22 $5 
U.S. Covered Litigation
Interchange Multidistrict Litigation (MDL) – Putative Class Actions

On November 20, 2019,December 18, 2020, the district court denied the bank defendants’ motionplaintiffs purporting to dismiss the claims brought against them byact on behalf of the putative Injunctive Relief Class.
On December 13, 2019, the district court granted final approval of the 2018 Amended Settlement Agreement relating to claims by the Damages Class which was subsequently appealed.moved for class certification.
Interchange Multidistrict Litigation (MDL) - Individual Merchant Actions
Visa has reached settlements with a number of merchants representing approximately 30%40% of the Visa-branded payment card sales volume of merchants who opted out of the Amended Settlement Agreement with the Damages Class plaintiffs.


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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

VE Territory Covered Litigation
Europe Merchant Litigation
Since July 2013, in excess of 500650 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 subsidiaries in the UK, 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 subsidiaries have settled the claims asserted by over 100 Merchants, leaving more than 400500 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.

With regard to the claim asserted by one Merchant, trial before the UK Competition Appeal Tribunal to determine the lawful amount, if any, the plaintiff may be entitled to recover is set for June 2022. Other Litigation
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 Home Depot of Canada Inc. In January 2020, Wal-Mart Canada and Home Depot of Canada Inc. filed applications to appeal the decisions of the British Columbia, Quebec and Ontario courts toplaintiffs, whose claims were stayed pending 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 ofUnited Kingdom's judgment, are moving their claims forward, mostly before the Saskatchewan court's decision. The application and an appeal toUK Competition Appeal Tribunal.
Other Litigation
EMV Chip Liability Shift
On January 19, 2021, the AlbertaU.S. Court of Appeal remain pending.
NutsAppeals for Candy
On December 31, 2019, plaintiff filed athe Second Circuit denied defendants’ request to appeal the district court’s decision granting plaintiffs’ motion to dismiss and for attorneys’ fees and costs based on the settlement reached between the parties and 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 to dismiss and for attorneys’ fees and costs. The case has been dismissed with prejudice.class certification.
Euronet Litigation
On December 13, 2019,In the claim by Euronet 360 Finance Limited, Euronet Polska Spolka z.o.o. and Euronet Services spol. s.r.o. (“Euronet”) served a claim, trial has been set for January 2023.
Plaid Inc. Acquisition
On January 12, 2021, the case filed by the U.S. Department of Justice against Visa and Plaid was dismissed.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
German ATM Litigation
In December 2020 and January 2021, 6 savings banks and cooperative banks filed claims in Germany against Visa Europe Ltd. challenging Visa’s ATM rules prohibiting the UK alleging that certain rules affecting ATMcharging of access fees in Poland,on domestic cash withdrawals with a credit card as anti-competitive. No damages are currently sought. On December 24, 2020, 275 German savings banks initiated conciliation proceedings against Visa Europe Ltd., Visa Europe Services, LLC., and Visa Europe Services, Inc. asserting claims related to the Czech Republic and Greece by Visa Inc. and Mastercard Incorporated, and certainsame rules.
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Table of their subsidiaries, breach various competition laws. Euronet seeks damages, costs, and injunctive relief to prevent the defendants from enforcing the aforementioned rules.

Contents
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 Item 1—Financial Statements of 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, 20192020 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.

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Overview
Visa is a global payments technology company that enables fast,innovative, secure and reliable electronic payments across more than 200 countries and territories. We facilitate global commerce through the transfer of value and information amongdigital payments across a global network of consumers, merchants, financial institutions, businesses, strategic partners and government entities.entities through innovative technologies. 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-addedvalue added services.
Financial overview. Our as-reported U.S. GAAP and non-GAAP net income and diluted earnings per share are as follows:
 Three Months Ended
December 31,
20202019
%
Change(1)
(in millions, except percentages and per share data)
Net income, as reported$3,126 $3,272 (4)%
Diluted earnings per share, as reported$1.42 $1.46 (3)%
Non-GAAP net income(2)
$3,125 $3,272 (4)%
Non-GAAP diluted earnings per share(2)
$1.42 $1.46 (3)%
 Three Months Ended
March 31,		 2020 vs. 2019 Six Months Ended
March 31,		 2020 vs. 2019
 2020 2019 
%
Change(1)
 2020 2019 
%
Change(1)
 (in millions, except percentages and per share data)
Net income, as reported$3,084
 $2,977
 4% $6,356
 $5,954
 7%
Diluted earnings per share, as reported$1.38
 $1.31
 6% $2.85
 $2.61
 9%
Non-GAAP net income(2)
$3,098
 $2,912
 6% $6,370
 $5,892
 8%
Non-GAAP diluted earnings per share(2)
$1.39
 $1.28
 9% $2.85
 $2.58
 11%
(1)Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
(1)
(2)
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 isremains difficult to predict. Our priority has beenremains the safety of our employees, including comprehensive plans to support employee wellness, as well as support for our clients and the communities affected. Althoughin which we live and operate. We are taking a measured approach in bringing our employees back in the office, with most of our staff are nowemployees currently working remotely, our network infrastructure and application performanceremotely. We continue to perform well and our business operations have comprehensive and coordinated plansremain in place to address business continuity and recovery needs around the world. We are also in very close and regular contact with our employees, clients, partners and with governments globally to help them navigate these challenging times.

InRevenues in the monthfirst quarter of March 2020, domestic spending, most notablyfiscal 2021 were at varying stages of recovery. During the quarter, there was year-over-year growth in travel, restaurants, entertainmentpayments volume and fuel decreased as countries imposed social distancing, shelter-in-place or total lock-down orders. Declines inprocessed transactions. While cross-border volume did improve during the quarter, it remains depressed as well as processed transactions negatively impacted international transaction and data processing revenues for the three months ended March 31, 2020. Service revenues for the three months ended March 31, 2020 were not significantly impacted, as they were recognized on the payments volume for the three months ended December 31, 2019.

Whilemajority of borders remain closed. Although we have not incurred operational disruptions thus far fromtaken measures to modify our business practices and reduce operating expenses, including scaling back hiring plans, restricting travel, lowering marketing spend and the COVID-19 outbreak,use of external resources, the impact that COVID-19 will have on our business isremains 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 may be takenare voluntarily adopted by governmentalthe public or required by governments or public health authorities, the development and availability of effective treatments or vaccines, and the impact to our employees and our operations, the business of our clients, supplier and business partners, and other factors identified in Part II,I, Item 1A “Risk Factors” in thisour Annual Report on Form 10-Q.10-K for the year ended September 30 2020, filed with the SEC on November 19, 2020. We will continue to evaluate the nature and extent of the impact to our business.
Highlights for the first halfquarter of fiscal 2020.2021. We recorded netNet revenues of $5.9 billion and $11.9 billion for the three and six months ended MarchDecember 31, 2020 respectively, an increase of 7%were $5.7 billion, and 8%, respectively,decreased 6% over the prior-year comparable periods,period, driven by the year-over-year changes in nominal payments volume, nominal cross-border volume, and processed transactions, which were not significantly impacted by the spread of COVID-19 untilglobally starting in the latter part of March 2020.2020, and higher client incentives. The decrease in net revenues were partially offset by growth in nominal payments volume and processed transactions. Exchange rate movements in the three and six months ended MarchDecember 31, 2020, as partially mitigated by our hedging program, negativelypositively impacted our net revenues growth by approximately one half of a percentage point.
Total operating expenses were $1.9 billion and $4.0 billion for the three and six months ended MarchDecember 31, 2020 respectively, an increase of 4%were $1.8 billion, and 9% on a GAAP and an increase of 3% and 8% on a non-GAAP basis, respectively,decreased 10% over the prior-year comparable periods. The increase was primarily due to higher personnel, depreciationperiod, on both a GAAP and amortization, general and administrative, and networking related expenses, as we continue to invest innon-GAAP basis, driven by our business growth.

overall cost reduction strategy.
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, as they may be non-recurring or have no cash impact, and may distort our longer-term operating trends. We consider non-GAAP measures useful to
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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 equity investments. Gains and losses on equity investments include periodic non-cash fair value adjustments and gains and losses onupon 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 equity investments, amortizationbusiness.
•Amortization of acquired intangible assets. Amortization of acquired intangible assets consists of amortization of intangible assets such as developed technology, customer relationships and acquisition-related costs for acquisitions that closedbrands acquired in connection with business combinations executed beginning in fiscal 20192019. Amortization charges for our acquired intangible assets are non-cash and subsequent periods. Prior year amountsare significantly affected by the timing, frequency and size of our acquisitions, rather than our core operations. As such, we have been restatedexcluded this amount and the related tax impact to conformfacilitate an evaluation of our current operating performance and comparison to our current presentation.past operating performance.
•
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
•Acquisition-related costs. Acquisition-related costs consist primarily of one-time transaction and integration costs associated with our business combinations. These costs include professional fees, technology integration fees, restructuring activities and other direct costs related tax impacts associated with these investments are tied to the performance of thecompanies that we invest inand therefore do not correlate 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 months ended March 31, 2020, we recorded net realized and unrealized losses of $2 million. During the six months ended March 31, 2020, we recorded net realized and unrealized gains of $11 million and related tax expense of $3 million. For the same prior-year comparable periods, we recorded net realized and unrealized gains of $84 million and $80 million, respectively, and related tax expense of $19 million and $18 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 performance and comparison to our past operating performance. During the three and six months ended March 31, 2020, we recorded amortization of acquired intangible assets of $11 million and $22 million, respectively, and related tax benefit of $2 million and $5 million, respectively. There were no comparable amounts during the three and six months ended March 31, 2019 since we are only adjusting for transactions that closed in fiscal 2019 and subsequent periods.
•
Acquisition-related costs. Acquisition-related costs consist primarily of one-time transaction and integration costs associated with our business 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 six months ended March 31, 2020, we recorded acquisition-related costs of $5 million and $7 million, respectively, and related tax benefit of $2 million during both the three and six months ended March 31, 2020. There were no comparable amounts during the three and six months ended March 31, 2019 since we are only adjusting for transactions that closed in fiscal 2019 and subsequent periods.
Non-GAAP operating expense, non-operating income (expense), income tax provision, effective income tax rate, net income and diluted earnings per share should not be relied upon as substitutes for, or considered in isolation from, measures calculated in accordance with U.S. GAAP. The following tables reconcile our as-reported financial measures, calculated in accordance with U.S. GAAP, to our respective non-GAAP financial measures for the three and six months ended MarchDecember 31, 2020 and 2019.
Three Months Ended December 31, 2020
Operating ExpensesNon-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$1,843 $(96)$622 16.6 %$3,126 $1.42 
(Gains) Losses on equity investments, net— (16)(4)(12)(0.01)
Amortization of acquired intangible assets(12)— 3 9 — 
Acquisition-related costs(3)— 1 2 — 
Non-GAAP$1,828 $(112)$622 16.6 %$3,125 $1.42 
 Three Months Ended March 31, 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$1,930
 $(95) $745
 19.4% $3,084
 $1.38
(Gains) Losses on equity investments, net—
 2
 —
   2
 —
Amortization of acquired intangible assets(11) —
 2
   9
 —
Acquisition-related costs(5) —
 2
   3
 —
Non-GAAP$1,914
 $(93) $749
 19.5% $3,098
 $1.39


 Six Months Ended March 31, 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$3,968
 $(137) $1,447
 18.5% $6,356
 $2.85
(Gains) Losses on equity investments, net—
 (11) (3)   (8) —
Amortization of acquired intangible assets(22) —
 5
   17
 0.01
Acquisition-related costs(7) —
 2
   5
 —
Non-GAAP$3,939
 $(148) $1,451
 18.6% $6,370
 $2.85
 Three Months Ended March 31, 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$1,853
 $36
 $700
 19.0% $2,977
 $1.31
(Gains) Losses on equity investments, net—
 (84) (19)   (65) (0.03)
Non-GAAP$1,853
 $(48) $681
 18.9% $2,912
 $1.28
 Six Months Ended March 31, 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$3,642
 $(51) $1,353
 18.5% $5,954
 $2.61
(Gains) Losses on equity investments, net—
 (80) (18)   (62) (0.03)
Non-GAAP$3,642
 $(131) $1,335
 18.5% $5,892
 $2.58
(1)
Figures in the table may not recalculate exactly due to rounding. Effective income tax rate, diluted earnings per share and their respective totals are calculated based on unrounded numbers.

Three Months Ended December 31, 2019
Operating ExpensesNon-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$2,038 $(42)$702 17.7 %$3,272 $1.46 
(Gains) Losses on equity investments, net— (13)(3)(10)— 
Amortization of acquired intangible assets(11)— 3 8 — 
Acquisition-related costs(2)— — 2 — 
Non-GAAP$2,025 $(55)$702 17.7 %$3,272 $1.46 
(1)Figures in the table may not recalculate exactly due to rounding. Effective income tax rate, diluted earnings per share and their respective totals are calculated based on unrounded numbers.
26
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Common stock repurchases.In January 2019,2020, our board of directors authorized an $8.5a $9.5 billion share repurchase program and in January(the “January 2020 authorized an additional $9.5 billion share repurchase program.Program”). During the three months ended MarchDecember 31, 2020, we repurchased 189 million shares of our class A common stock in the open market for $3.1$1.8 billion. As of MarchDecember 31, 2020, our January 2020 share repurchase programProgram had remaining authorized funds of $8.1$3.7 billion. In January 2021, our board of directors authorized an additional $8.0 billion for share repurchase. All share repurchase programs authorized prior to January 2020 have been completed.program. See Note 10—9—Stockholders’ Equity to our unaudited consolidated financial statements.
Acquisition. On January 13, 2020, we entered into a definitive agreement to acquire12, 2021, Visa and 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.mutually terminated their merger agreement announced on January 13, 2020. See Note 8—Debt2—Acquisitions and Note 13—Legal Matters to our unaudited consolidated financial statements.
Payments volume and transaction counts.processed transactions. 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.
Nominal payments volume growth in the United States posted high single-digit growthU.S. for the three and six months ended December 31, 2019September 30, 2020(1)was 7%, driven mainly by consumer debit and commercial. Nominalwhile nominal international payments volume growth was negatively impacted by movements in 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 six months ended December 31, 2019September 30, 2020 was 8% and 9%, respectively.1%. Growth in processed transactions reflects the ongoing worldwide shift to electronic payments, even withpartially offset by the decrease in processed transactions the latter partimpact of March 2020 as COVID-19 spread throughout the world.COVID-19.

The following table presents nominal payments and cash volume:
United StatesInternationalVisa Inc.
Three Months Ended September 30,(1)
Three Months Ended September 30,(1)
Three Months Ended September 30,(1)
20202019
% Change(2)
20202019
% Change(2)
20202019
% Change(2)
(in billions, except percentages)
Nominal payments volume
Consumer credit$378 $405 (7)%$573 $646 (11)%$951 $1,051 (10)%
Consumer debit(3)
555 446 25 %584 501 17 %1,140 947 20 %
Commercial(4)
164 170 (4)%94 101 (7)%258 271 (5)%
Total nominal payments volume(2)
$1,097 $1,021 7 %$1,252 $1,248 — %$2,349 $2,269 4 %
Cash volume165 148 12 %481 566 (15)%646 714 (10)%
Total nominal volume(2),(5)
$1,262 $1,168 8 %$1,733 $1,814 (5)%$2,995 $2,983 — %
27
 United States International Visa Inc.
 
Three Months Ended December 31,(1)
 
Three Months Ended December 31,(1)
 
Three Months Ended December 31,(1)
 2019 2018 
%
Change(2)
 2019 2018 
%
Change(2)
 2019 2018 
%
Change(2)
 (in billions, except percentages)
Nominal payments volume                 
Consumer credit$424
 $399
 6% $662
 $637
 4 % $1,086
 $1,036
 5 %
Consumer debit(3)
461
 422
 9% 536
 479
 12 % 997
 902
 11 %
Commercial(4)
171
 158
 8% 107
 99
 8 % 278
 257
 8 %
Total nominal payments volume(2)
$1,057
 $980
 8% $1,304
 $1,215
 7 % $2,361
 $2,194
 8 %
Cash volume145
 142
 2% 575
 587
 (2)% 719
 729
 (1)%
Total nominal volume(2),(5)
$1,201
 $1,121
 7% $1,879
 $1,802
 4 % $3,080
 $2,923
 5 %
                  
 United States International Visa Inc.
 
Six Months Ended December 31,(1)
 
Six Months Ended December 31,(1)
 
Six Months Ended December 31,(1)
 2019 2018 
%
Change(2)
 2019 2018 
%
Change(2)
 2019 2018 
%
Change(2)
 (in billions, except percentages)
Nominal payments volume                 
Consumer credit$829
 $781
 6% $1,308
 $1,251
 5 % $2,137
 $2,032
 5 %
Consumer debit(3)
908
 830
 9% 1,036
 938
 10 % 1,944
 1,768
 10 %
Commercial(4)
342
 313
 9% 208
 191
 9 % 549
 505
 9 %
Total nominal payments volume(2)
$2,079
 $1,925
 8% $2,552
 $2,380
 7 % $4,631
 $4,305
 8 %
Cash volume292
 286
 2% 1,140
 1,166
 (2)% 1,432
 1,452
 (1)%
Total nominal volume(2),(5)
$2,371
 $2,211
 7% $3,692
 $3,546
 4 % $6,063
 $5,757
 5 %
Table of Contents
The following table presents nominal and constant payments and cash volume growth:
InternationalVisa Inc.
 
Three Months
Ended September 30,
2020 vs. 2019(1),(2)
Three Months
Ended September 30,
2020 vs. 2019(1),(2)
 Nominal
Constant(6)
Nominal
Constant(6)
Payments volume growth
Consumer credit growth(11)%(10)%(10)%(9)%
Consumer debit growth(3)
17 %17 %20 %21 %
Commercial growth(4)
(7)%(5)%(5)%(4)%
Total payments volume growth(2)
— %1 %4 %4 %
Cash volume growth(15)%(10)%(10)%(5)%
Total volume growth(2)
(5)%(2)%— %2 %
 International Visa Inc. International Visa Inc.
 
Three Months
Ended December 31,
2019 vs. 2018(1),(2)
 
Three Months
Ended December 31,
2019 vs. 2018(1),(2)
 
Six Months
Ended December 31,
2019 vs. 2018(1),(2)
 
Six Months
Ended December 31,
2019 vs. 2018(1),(2)
 Nominal 
Constant(6)
 Nominal 
Constant(6)
 Nominal 
Constant(6)
 Nominal 
Constant(6)
Payments volume growth               
Consumer credit growth4 % 5 % 5 % 6 % 5 % 6 % 5 % 6%
Consumer debit growth(3)
12 % 12 % 11 % 11 % 10 % 13 % 10 % 11%
Commercial growth(4)
8 % 10 % 8 % 9 % 9 % 11 % 9 % 10%
Total payments volume growth(2)
7 % 8 % 8 % 8 % 7 % 9 % 8 % 9%
Cash volume growth(2)% (1)% (1)% (1)% (2)% (1)% (1)% —%
Total volume growth(2)
4 % 5 % 5 % 6 % 4 % 6 % 5 % 6%
(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 months ended December 31, 2020 and 2019 were based on nominal payments volume reported by our financial institution clients for the three months ended September 30, 2020 and 2019, respectively.
(1)
(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, 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 are not material.
(6)Growth on a constant-dollar basis excludes the impact of foreign currency fluctuations against the U.S. dollar.
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 six months ended March 31, 2020 and 2019 were based on nominal payments volume reported by our financial institution clients for the three and six months ended December 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, 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 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
December 31,
20202019
%
Change(1)
(in millions, except percentages)
Visa processed transactions39,213 37,775 4 %
 Three Months Ended March 31, Six Months Ended March 31,
2020
2019
%
Change(1)
 2020 2019 
%
Change(1)
(in millions, except percentages)
Visa processed transactions34,941
 32,544
 7% 72,716
 66,476
 9%
(1)Figures in the table may not recalculate exactly due to rounding. Percentage change is calculated based on unrounded numbers.
(1)
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
December 31,
 20202019$
Change
%
Change(1)
 (in millions, except percentages)
U.S.$2,667 $2,717 $(50)(2)%
International3,020 3,337 (317)(9)%
Net revenues$5,687 $6,054 $(367)(6)%
 Three Months Ended
March 31,		 2020 vs. 2019 Six Months Ended
March 31,		 2020 vs. 2019
 2020 2019 
$
Change
 
%
Change(1)
 2020 2019 
$
Change
 
%
Change(1)
 (in millions, except percentages)
U.S.$2,650
 $2,479
 $171
 7% $5,367
 $4,987
 $380
 8%
International3,204
 3,015
 189
 6% 6,541
 6,013
 528
 9%
Net revenues$5,854
 $5,494
 $360
 7% $11,908
 $11,000
 $908
 8%
(1)(1)Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
Net revenues increaseddecreased primarily due to the year-over-year changes in payments volume, cross-border volume, and processed transactions, which were not significantly impacted by COVID-19 untilstarting in the latter part of March 2020.2020, and higher client incentives. The increasedecrease in net revenues was also partially offset by the increasegrowth in client incentives.nominal payments volume and processed transactions.
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Our net revenues are impacted by the overall strengthening or weakening of the U.S. dollar as payments volume and related revenues denominated in local currencies are converted to U.S. dollars. Exchange rate movements in the three and six months ended MarchDecember 31, 2020, as partially mitigated by our hedging program, negativelypositively impacted our net revenues growth by approximately one half of a percentage point.
The following table sets forth the components of our net revenues:
 Three Months Ended
December 31,
 20202019$
Change
%
Change(1)
 (in millions, except percentages)
Service revenues$2,677 $2,555 $122 5 %
Data processing revenues3,033 2,864 169 6 %
International transaction revenues1,451 2,018 (567)(28)%
Other revenues384 365 19 5 %
Client incentives(1,858)(1,748)(110)6 %
Net revenues$5,687 $6,054 $(367)(6)%
 Three Months Ended
March 31,		 2020 vs. 2019 Six Months Ended
March 31,		 2020 vs. 2019
 2020 2019 
$
Change
 
%
Change(1)
 2020 2019 $
Change		 
%
Change(1)
 (in millions, except percentages)
Service revenues$2,623
 $2,417
 $206
 9% $5,178
 $4,759
 $419
 9%
Data processing revenues2,711
 2,432
 279
 11% 5,575
 4,902
 673
 14%
International transaction revenues1,833
 1,796
 37
 2% 3,851
 3,647
 204
 6%
Other revenues392
 327
 65
 20% 757
 626
 131
 21%
Client incentives(1,705) (1,478) (227) 15% (3,453) (2,934) (519) 18%
Net revenues$5,854
 $5,494
 $360
 7% $11,908
 $11,000
 $908
 8%
(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 4% growth in nominal payments volume. Service revenues were also impacted by select pricing modifications and business mix.
•Data processing revenues increased mainly due to overall growth in processed transactions of 4% and growth in value added services.
•International transaction revenues decreased due to a 32% decline in nominal cross-border volumes, excluding transactions within Europe, as COVID-19 spread globally starting in the latter part of March 2020. International transaction revenues were also impacted by fluctuations in the volatility of a broad range of currencies and business mix.
•Other revenues increased primarily due to higher consulting and marketing related fees and other value added services revenues.
•Client incentives increased in correlation with the increase in payments volumes. 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 8% growth in nominal payments volume during the three and six month comparable periods as well as select pricing modifications effective in 2019, partially offset by unfavorable business mix. Service revenues for the three months ended March 31, 2020 were not significantly impacted by COVID-19 as they were recognized on the payments volume for the three months ended December 31, 2019.

•
Data processing revenues increased mainly due to overall growth in processed transactions of 7% and 9% during the three and six month comparable periods, respectively,select pricing modifications effective in 2019, as well as faster growth of our value-added services and acquisition-related revenue. The growth of our data processing revenues was negatively impacted in the latter part of March 2020 by the decrease in processed transactions as COVID-19 spread throughout the world.
•
International transaction revenues increased primarily due to select pricing modifications effective in 2019. International transaction revenues also reflected fluctuations in the volatility of a broad range of currencies as well as a 4% decline and 2% growth in nominal cross-border volumes during the three and six month comparable periods, respectively, due to the decrease in cross-border volume through the quarter as COVID-19 spread throughout the world.
•
Other revenues increased primarily due to higher revenues from value-added services.
•
Client incentives increased mainly due to incentives recognized on long-term customer contracts that were initiated or renewed in the past 12 months and overall growth 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.
Operating Expenses
The following table sets forth components of our total operating expenses:
 Three Months Ended
December 31,
20202019$
Change
%
Change(1)
 (in millions, except percentages)
Personnel$981 $982 $(1)— %
Marketing205 274 (69)(25)%
Network and processing173 181 (8)(4)%
Professional fees83 106 (23)(21)%
Depreciation and amortization197 182 15 8 %
General and administrative203 313 (110)(35)%
Litigation provision1 — 1 165 %
Total operating expenses$1,843 $2,038 $(195)(10)%
(1)Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
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Table of Contents
 Three Months Ended
March 31,		 2020 vs. 2019 Six Months Ended
March 31,		 2020 vs. 2019
 2020 2019 
$
Change
 
%
Change(1)
 2020 2019 
$
Change
 
%
Change(1)
 (in millions, except percentages)
Personnel$940
 $894
 $46
 5 % $1,922
 $1,701
 $221
 13 %
Marketing235
 241
 (6) (3)% 509
 517
 (8) (1)%
Network and processing183
 171
 12
 7 % 364
 344
 20
 6 %
Professional fees103
 101
 2
 2 % 209
 192
 17
 9 %
Depreciation and amortization192
 160
 32
 20 % 374
 319
 55
 17 %
General and administrative269
 264
 5
 2 % 582
 540
 42
 8 %
Litigation provision8
 22
 (14) (67)% 8
 29
 (21) (73)%
Total operating expenses$1,930
 $1,853
 $77
 4 % $3,968
 $3,642
 $326
 9 %
(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 offset by lower incentive compensation for the three-month comparable period. For the six-month comparable period, expenses increased due to continued headcount growth in support of our investment strategy for future growth.
•
Network and processing expenses increased mainly due to continued technology and processing network investments to support growth.
•
Depreciation and amortization expenses increased primarily due to additional depreciation and amortization from our on-going investments, including acquisitions.
•
General and administrative expenses increased mainly due to reclassification of certain expenses to general and administrative, higher product enhancements costs in support of our business growth and higher indirect taxes, offset by favorable currency fluctuations.
•
Litigation provision decreased primarily due to lower accruals for uncovered litigation.

•Marketing expenses decreased reflecting our overall cost reduction strategy.
•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, lower product enhancements costs and our overall cost reduction strategy.
Non-operating Income (Expense)
The following table sets forth the components of our non-operating income (expense):
 Three Months Ended
December 31,
20202019$
Change
%
Change(1)
 (in millions, except percentages)
Interest expense, net$(136)$(111)$(25)23 %
Investment income and other40 69 (29)(43)%
Total non-operating income (expense)$(96)$(42)$(54)130 %
(1)Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
•Interest expense, net increased primarily as a result of the issuance of debt in fiscal 2020.
•Investment income and other decreased primarily due to lower interest income on our cash and investments.
Effective Income Tax Rate
The following table sets forth our effective income tax rate:
 Three Months Ended
December 31,
 20202019Change
Effective income tax rate17 %18 %(1)%
The difference in the effective tax rates between the three months ended December 31, 2020 and 2019 was primarily due to an $81 million tax benefit recognized during the three months ended December 31, 2020 as a result of the conclusion of audits by taxing authorities.
30
 Three Months Ended
March 31,		 2020 vs. 2019 Six Months Ended
March 31,		 2020 vs. 2019
 2020 2019 
$
Change
 
%
Change(1)
 2020 2019 
$
Change
 
%
Change(1)
 (in millions, except percentages)
Interest expense, net$(118) $(140) $22
 (16)% $(229) $(285) $56
 (20)%
Investment income and other23
 176
 (153) (87)% 92
 234
 (142) (61)%
Total non-operating income (expense)$(95) $36
 $(131) (367)% $(137) $(51) $(86) 170 %
(1)
Table of Contents
Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
•
Interest expense, net decreased 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 decreased primarily due to lower gains on our equity investments and lower interest income on our cash and investments.
Liquidity and Capital Resources
Cash Flow Data
The following table summarizes our cash flow activity for the periods presented:
 Six Months Ended
March 31,
 2020 2019
 (in millions)
Total cash provided by (used in):   
Operating activities$5,342
 $5,358
Investing activities2,441
 (396)
Financing activities(5,887) (5,486)
Effect of exchange rate changes on cash and cash equivalents88
 (171)
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents$1,984
 $(695)
 Three Months Ended
December 31,
 20202019
 (in millions)
Total cash provided by (used in):
Operating activities$3,513 $3,875 
Investing activities639 562 
Financing activities(5,572)(3,133)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents304 127 
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents$(1,116)$1,431 
Operating activities. Cash provided by operating activities for the sixthree months ended MarchDecember 31, 2020 was slightly lower than the prior-year comparable period due to higher client incentives and timing of settlement. Partially offset by continued growth in our underlying business andprior-year receipt of the $467 million takedown payment associated with the Interchange Multidistrict Litigation. See Note 14—Legal Matters to our unaudited consolidated financial statements.Litigation, partially offset by lower client incentives and lower cash paid for taxes.
Investing activities. Cash provided by investing activities for the sixthree months ended MarchDecember 31, 2020 increased primarily due to higher maturities and sales of investment securities, and fewerpartially offset by higher purchases of investment securities as compared to the prior-year period.
Financing activities. Cash used in financing activities for the sixthree months ended MarchDecember 31, 2020 was slightly higher than the prior-year comparable period primarily due to higher share repurchasethe $3.0 billion principal debt payment upon maturity of our senior notes in December 2020 and higher dividends paid. Partiallypaid, partially offset by proceeds received from the issuance of commercial paper.lower share repurchases. See Note 8—7—Debt and Note 10—9—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 budgets and 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. The carrying amount outstanding at March 31, 2020 was $1.0 billion, with a weighted-average interest rate of 1.55% and remaining maturities of less than 12 months. See Note 8—Debt to our unaudited consolidated financial statements.
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.
Uses of Liquidity
There has been no significant change to our primary uses of liquidity since September 30, 2019,2020, except as discussed below.
Common stock repurchases. In January 2020, our board of directors authorized a $9.5 billion share repurchase program. During the sixthree months ended MarchDecember 31, 2020, we repurchased 319 million shares of our class A common stock for $5.5$1.8 billion. As of MarchDecember 31, 2020, our January 2020 share repurchase programProgram had remaining authorized funds of $8.1 billion for share repurchase.$3.7 billion. See Note 10—9—Stockholders’ Equity to our unaudited consolidated financial statements.
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Dividends. During the sixthree months ended MarchDecember 31, 2020, we declared and paid $1.3 billion$703 million in dividends to holders of our common and preferred stock. On April 21, 2020,January 26, 2021, our board of directors declared a cash dividend in the amount of $0.30$0.32 per share of class A common stock (determined in the case of class B and C common stock and series A, UK&I and Europe preferred stock on an as-converted basis), which will be paid on June 2, 2020,March 1, 2021, to all holders of record as of May 14, 2020.February 12, 2021. See Note 10—9—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.
Senior notes. In December 2015, we issued fixed-rate senior notes in an aggregate principal amount of $16.0 billion, with maturities ranging between 2 and 30 years. A2020, a principal payment of $3.0 billion is duewas made on our fixed-rate senior notes issued in December 14, 2020, for which we have sufficient liquidity.2015. See Note 8—7—Debt to our unaudited consolidated financial statements.
Acquisition. On
Accounting Pronouncements Not Yet Adopted
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Board Update (“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 on October 1, 2021. The adoption is not expected to have a material impact on our consolidated financial statements.
In January 13, 2020, we entered intothe FASB issued ASU 2020-01, which clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the fair value measurement alternative. The amendments in the ASU are effective on October 1, 2021. The adoption is not expected to have a definitive agreementmaterial impact on our consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, which provides optional expedients and exceptions for applying U.S. GAAP to acquire Plaid, Inc. for $5.3 billion. We will pay approximately $4.9 billion of cashcontracts, hedging relationships 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 areother transactions that reference the London Interbank Offered Rate or another reference rate expected to be completed bydiscontinued because of reference rate reform. Subsequently, the end of 2020.FASB also issued an amendment to this standard. The amendments in the ASU are effective upon issuance through December 31, 2022. We intend to fundare evaluating the acquisition with cash, cash equivalentseffect ASU 2020-04 and investments, as well as through the issuance of new indebtedness.its subsequent amendment will have on our consolidated financial statements.
ITEM 3.Quantitative and Qualitative Disclosures about Market Risk
There have been no significant changes to our market risks since September 30, 2019.2020.

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. There have been no 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
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Table 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.Contents

PART II. OTHER INFORMATION
 
ITEM 1.Legal Proceedings.
Refer to Note 14—13—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.
There have been no material updates toFor 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, 2019,2020, filed with the SEC on November 14, 2019, other than as set forth below.19, 2020.
Business Risks
The extent to which the coronavirus (“COVID-19”) outbreak and measures taken in response thereto impact our business, results of operations and financial condition will depend on future developments, which are highly uncertain and are difficult to predict.
The global impacts of the COVID-19 outbreak and related government actions taken to reduce the spread of the virus have been weighing on the macroeconomic environment, and have significantly increased economic uncertainty and reduced economic activity. Risks related to consumers and businesses changing spending habits, which affect domestic and cross-border activity, are described in our risk factor titled “Global economic, political, market, and social events or conditions may harm our business” under “Risk Factors-Business Risks” in our Annual Report on Form 10-K for the year ended September 30, 2019.
The outbreak has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place or total lock-down orders and business limitations and shutdowns. Such measures have significantly caused rising unemployment in many countries, affected our cross-border and domestic payment activity and negatively impacted consumer and business spending. Governments around the globe have taken steps to mitigate some of the more severe economic effects of the virus, but there can be no assurance that such steps will be effective or achieve their desired results in a timely fashion.
The outbreak has adversely impacted and is likely to further adversely impact our workforce and operations and the operations of our clients, customers, suppliers and business partners. COVID-19 impacted both card present and card not present cross-border travel related spending, initially in Asia during February, and then globally and more significantly in March as the outbreak spread to the rest of the world. In addition, as countries imposed social distancing, shelter-in-place or total lock-down orders, domestic spending, most notably in travel, restaurants, entertainment and fuel, sharply declined in the latter part of March.
In particular, we may experience financial losses due to a number of operational factors, including:
merchant, acquirer and issuer failures and credit settlement risk, particularly with respect to the retail, travel and hospitality industries, including airlines, cruise ships, hotels, restaurants and entertainment events;
third party disruptions, including potential outages at network providers, call centers and other suppliers;
increased cyber and payment fraud risk related to COVID-19, as cybercriminals attempt to profit from the disruption, given increased online banking, e-commerce and other online activity;
challenges to the availability and reliability of our network due to changes to normal operations, including the possibility of one or more clusters of COVID-19 cases occurring at our data centers, affecting our employees, or affecting the systems or employees of our issuers, acquirers or merchants; and
additional regulatory requirements, including, for example, government initiatives or requests to reduce or eliminate payments fees or other costs.
These factors may remain prevalent for a significant period of time and may continue to adversely affect our business, results of operations and financial condition even after the COVID-19 outbreak has subsided.

The spread of COVID-19 has caused us to modify our business practices (including restricting employee travel, developing social distancing plans for our employees and cancelling physical participation in meetings, events and conferences), and we may take further actions as may be required by government authorities or as we determine are in the best interests of our employees, customers and business partners. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus or will otherwise be satisfactory to government authorities.
The extent to which the COVID-19 outbreak impacts our business, results of operations and financial condition in the longer term will depend on future developments, which are highly uncertain and are difficult to predict, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions broadly resume. Even after the COVID-19 outbreak has subsided, we may continue to experience materially adverse impacts to our business as a result of the virus’s global economic impact, including lower domestic and cross border spending trends, the availability of credit, adverse impacts on our liquidity and any recessionary conditions that occur and persist.
There are no comparable recent events that provide guidance as to the effect the spread of COVID-19 may have on our business, and, as a result, the ultimate impact of the outbreak is highly uncertain and subject to change. We do not yet know the full extent of the impacts on our business or the global economy as a whole. However, the effects could have a material impact on our results of operations and heighten many of our known risks described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended September 30, 2019, including, but not limited to:
“Increased scrutiny and regulation of the global payments industry, including with respect to interchange reimbursement fees, merchant discount rates, operating rules, risk management protocols and other related practices, could harm our business;”
“We depend on relationships with financial institutions, acquirers, processors, merchants, and other third parties;”
•
“A disruption, failure or breach of our networks or systems, including as a result of cyber-attacks, could harm our business;” and
“Our indemnification obligation to fund settlement losses of our clients exposes us to significant risk of loss and may reduce our liquidity.”
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 MarchDecember 31, 2020:
PeriodTotal 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)
October 1 - 31, 20203 $194.89 3 $4,739 
November 1 - 30, 20203 $202.30 3 $4,264 
December 1 - 31, 20203 $210.45 3 $3,624 
Total9 $202.30 9 
(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 the 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 and 2021, our board of directors authorized a share repurchase program for $9.5 billion and $8.0 billion, respectively. These authorizations have no expiration date.
33
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)
January 1-31, 2020 4
 $198.53
 4
 $10,357
February 1-29, 2020 4
 $202.86
 4
 $9,582
March 1-31, 2020 10
 $164.01
 10
 $7,942
Total 18
 $180.10
 18
  
(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 and 2019, our board of directors authorized share repurchase programs for $9.5 billion and $8.5 billion, respectively. These authorizations have no expiration date. All share repurchases authorized prior to January 2020 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. 

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Table of Contents
ITEM 6.Exhibits.
EXHIBIT INDEX
 
    Incorporated by Reference
Exhibit
Number
 Description of Documents Schedule/ Form File Number Exhibit Filing Date
           
4.1 Form of 1.900% Senior Note due 2027 8-K 001-33977 
4.1
 4/2/2020
           
4.2 Form of 2.050% Senior Note due 2030 8-K 001-33977 
4.2
 4/2/2020
           
4.3 Form of 2.700% Senior Note due 2040 8-K 001-33977 
4.3
 4/2/2020
           
31.1+
 
Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
        
           
31.2+
 
Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
        
           
32.1+
 
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
        
           
32.2+
 
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
        
           
101.INS+ XBRL Instance Document        
           
101.SCH+ XBRL Taxonomy Extension Schema Document        
           
101.CAL+ XBRL Taxonomy Extension Calculation Linkbase Document        
           
101.DEF+ XBRL Taxonomy Extension Definition Linkbase Document        
           
101.LAB+ XBRL Taxonomy Extension Label Linkbase Document        
           
101.PRE+ XBRL Taxonomy Extension Presentation Linkbase Document        
Incorporated by Reference
Exhibit
Number		Description of DocumentsSchedule/ FormFile NumberExhibitFiling Date
3.1Seventh Restated Certificate of Incorporation of Visa Inc.8-K001-33977
3.1
1/27/2021
3.2Amended and Restated Bylaws of Visa Inc.8-K001-33977
3.2
1/27/2021
10.22Visa Inc. 2007 Equity Incentive Compensation Plan, as amended and restated8-K001-33977
10.22
1/27/2021
101.INS+XBRL Instance Document
101.SCH+XBRL Taxonomy Extension Schema Document
101.CAL+XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF+XBRL Taxonomy Extension Definition Linkbase Document
101.LAB+XBRL Taxonomy Extension Label Linkbase Document
101.PRE+XBRL Taxonomy Extension Presentation Linkbase Document
+Filed or furnished herewith.

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SIGNATURES
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.
 
VISA INC.
Date:January 29, 2021VISA INC.
By:
Date:May 4, 2020By:/s/ Alfred F. Kelly, Jr.
Name:Alfred F. Kelly, Jr.
Title:
Chairman and Chief Executive Officer

(Principal Executive Officer)
Date:May 4, 2020January 29, 2021By:/s/ Vasant M. Prabhu
Name:Vasant M. Prabhu
Title:
Vice Chairman and Chief Financial Officer

(Principal Financial Officer)
Date:May 4, 2020January 29, 2021By:/s/ James H. Hoffmeister
Name:James H. Hoffmeister
Title:
Global Corporate Controller and

Chief Accounting Officer

(Principal Accounting Officer)

4136