VISA, INC. 
This management's discussion and analysis provides a review of the results of operations, financial condition and the liquidity and capital resources ofVisa 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 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 theU.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 ongoing effects of the coronavirus ("COVID-19") pandemic, the measures taken in response, as well as the speed and strength of an economic recovery; prospects, developments, strategies and growth of our business; anticipated expansion of our products in certain countries; industry developments; anticipated timing and 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 ourSEC filings, including our Annual Report on Form 10-K, for the year endedSeptember 30, 2020 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. 27 -------------------------------------------------------------------------------- Table of Contents OverviewVisa is a global payments technology company that enables innovative, secure and reliable electronic payments across more than 200 countries and territories. We facilitate digital payments across a global network of consumers, merchants, financial institutions, businesses, strategic partners and government 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 added services. Financial overview. Our as-reportedU.S. GAAP and non-GAAP net income and diluted earnings per share are as follows: Three Months Ended Nine Months Ended June 30, June 30, % % 2021 2020 Change(1) 2021 2020 Change(1) (in millions, except percentages and per share data) Net income, as reported$ 2,575 $ 2,373 9 %$ 8,727 $ 8,729 - % Diluted earnings per share, as reported$ 1.18 $ 1.07 10 %$ 3.98 $ 3.92 2 % Non-GAAP net income(2)$ 3,256 $ 2,347 39 %$ 9,412 $ 8,717 8 % Non-GAAP diluted earnings per share(2)$ 1.49 $ 1.06 41 %$ 4.29 $ 3.91 10 % (1)Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers. (2)For a full reconciliation of our non-GAAP financial results, see tables in Non-GAAP financial results below. Coronavirus. COVID-19 continues to have an impact globally. While we have been actively monitoring the worldwide spread of COVID-19, the extent to which COVID-19 continues to impact our business remains difficult to predict. Our priority remains the safety of our employees, clients and the communities in which we live and operate. We are taking a measured approach in bringing our employees back in the office, with most of our employees currently working remotely. We continue to remain in close and regular contact with our employees, clients, partners and with governments globally to help them navigate these challenging times. During the quarter, the year-over-year growth in payments volume, processed transactions, and cross-border volume all improved at various paces globally. The impact that COVID-19 continues to have on our business remains difficult to predict due to numerous uncertainties, including the transmissibility, severity, duration and resurgence of the outbreak, new variants of the virus, the effectiveness of social distancing measures or actions that are voluntarily adopted by the public or required by governments or public health authorities, the availability and rollout of effective treatments or vaccines, the timing of an economic recovery, and the impact to our employees and our operations, the business of our clients, supplier and business partners, and other factors identified in Part I, Item 1A "Risk Factors" in our Annual Report on Form 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 nine months of fiscal 2021. For the three and nine months endedJune 30, 2021 , net revenues were$6.1 billion and$17.5 billion , respectively, and increased 27% and 5% over the prior-year comparable periods, respectively. The three-month year-over-year changes were primarily due to the growth in nominal payments volume, processed transactions and nominal cross-border volume, as the business laps the initial impacts of COVID-19 starting inMarch 2020 and various markets relaxed restrictions, partially offset by higher client incentives. The nine-month year-over-year changes were primarily due to the growth in nominal payments volume and processed transactions, partially offset by higher client incentives and lower nominal cross-border volume. During the three and nine months endedJune 30, 2021 , exchange rate movements, which are partially mitigated by our hedging program, positively impacted our net revenues by approximately one percentage point and one half of a percentage point, respectively. For the three months endedJune 30, 2021 , GAAP operating expenses were$2.1 billion and increased 12% over the prior-year comparable period, primarily driven by higher personnel expenses and higher marketing expenses, partially offset by lower general and administrative expenses. For the nine months endedJune 30, 2021 , GAAP operating expenses were$6.1 billion and increased 4% over the prior-year comparable period, primarily driven by higher personnel expenses, partially offset by lower general and administrative expenses. 28 -------------------------------------------------------------------------------- Table of Contents For the three months endedJune 30, 2021 , non-GAAP operating expenses were$2.0 billion and increased 12% over the prior-year comparable period, primarily due to higher personnel expenses and higher marketing expenses, partially offset by lower general and administrative expenses. For the nine months endedJune 30, 2021 , non-GAAP operating expenses were$5.9 billion and increased 2% over the prior-year comparable period, primarily driven by higher personnel expenses, partially offset by lower general and administrative expenses. 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 investors because they provide greater transparency into management's view and assessment of our ongoing 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 related tax impacts associated with these investments are tied to the performance of the companies that we invest in and therefore do not correlate to the underlying performance of our business. •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. •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. •Remeasurement of deferred tax balances. During the three and nine months endedJune 30, 2021 , in connection with theUK enacted legislation onJune 10, 2021 that will increase the tax rate from 19% to 25%, effectiveApril 1, 2023 , we remeasured our net deferred tax liabilities, resulting in the recognition of a non-recurring, non-cash income tax expense of$1.0 billion . •Indirect taxes. During the nine months endedJune 30, 2021 , we recognized a one-time charge within general and administrative expense of$152 million , before tax. Net of the related income tax benefit of$40 million , determined by applying applicable tax rates, non-GAAP net income increased by$112 million . This charge is to record our estimate of probable additional indirect taxes, related to prior periods, for which we could be liable as a result of certain changes in applicable law. This one-time charge is not representative of our ongoing operations. 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 withU.S. GAAP. The following tables reconcile our as-reported financial measures, calculated in accordance withU.S. GAAP, to our respective non-GAAP financial measures for the three and nine months endedJune 30, 2021 and 2020. 29
--------------------------------------------------------------------------------
Table of Contents
Three Months Ended
Diluted
Operating Non-operating Income Tax Effective Income Net Earnings Per
Expenses Income (Expense) Provision Tax Rate(1) Income Share(1)
(in millions, except percentages and per share data)
As reported $ 2,066 $ 325 $ 1,814 41.3 % $ 2,575 $ 1.18
(Gains) losses on equity investments,
net - (439) (99) (340) (0.16)
Amortization of acquired intangible
assets (13) - 3 10 -
Acquisition-related costs (5) - 1 4 -
Remeasurement of deferred tax
balances - - (1,007) 1,007 0.46
Non-GAAP $ 2,048 $ (114) $ 712 17.9 % $ 3,256 $ 1.49
Nine Months Ended June 30, 2021
Diluted
Operating Non-operating Income Tax Effective Income Net Earnings Per
Expenses Income (Expense) Provision Tax Rate(1) Income Share(1)
(in millions, except percentages and per share data)
As reported $ 6,057 $ 276 $ 3,038 25.8 % $ 8,727 $ 3.98
(Gains) losses on equity investments,
net - (611) (138) (473) (0.22)
Amortization of acquired intangible
assets (38) - 9 29 0.01
Acquisition-related costs (13) - 3 10 -
Remeasurement of deferred tax
balances - - (1,007) 1,007 0.46
Indirect taxes (152) - 40 112 0.05
Non-GAAP $ 5,854 $ (335) $ 1,945 17.1 % $ 9,412 $ 4.29 Three Months Ended
Diluted
Operating Non-operating Income Tax Effective Income Net Earnings Per
Expenses Income (Expense) Provision Tax Rate(1) Income Share(1)
(in millions, except percentages and per share data)
As reported $ 1,838 $ (67) $ 559 19.1 % $ 2,373 $ 1.07
(Gains) losses on equity investments,
net - (51) (11) (40) (0.02)
Amortization of acquired intangible
assets (13) - 3 10 -
Acquisition-related costs (4) - - 4 -
Non-GAAP $ 1,821 $ (118) $ 551 19.0 % $ 2,347 $ 1.06
30--------------------------------------------------------------------------------
Table of Contents
Nine Months Ended June 30, 2020
Diluted
Operating Non-operating Income Tax Effective Income Net Earnings Per
Expenses Income (Expense) Provision Tax Rate(1) Income Share(1)
(in millions, except percentages and per share data)
As reported $ 5,806 $ (204) $ 2,006 18.7 % $ 8,729 $ 3.92
(Gains) losses on equity investments,
net - (62) (14) (48) (0.02)
Amortization of acquired intangible
assets (35) - 8 27 0.01
Acquisition-related costs (11) - 2 9 -
Non-GAAP $ 5,760 $ (266) $ 2,002 18.7 % $ 8,717 $ 3.91
(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.
Pending acquisitions. On June 24, 2021 , we entered into a definitive agreement
to acquire Tink AB ("Tink") for €1.8 billion, inclusive of cash and retention
incentives. Tink is a European open banking platform that enables financial
institutions, fintechs and merchants to build tailored financial management
tools, products and services for European consumers and businesses based on
their financial data. This acquisition is subject to customary closing
conditions, including regulatory reviews and approvals.
On July 22, 2021 , we entered into a definitive agreement to acquire The Currency
Cloud Group Limited ("Currencycloud"), a UK -based global platform that enables
banks and fintechs to provide innovative foreign exchange solutions for
cross-border payments. The acquisition values Currencycloud at £700 million,
inclusive of cash and retention incentives. The financial consideration will be
reduced by the outstanding equity of Currencycloud that we already own. This
acquisition is subject to customary closing conditions, including regulatory
reviews and approvals.
Common stock repurchases. During the three months ended June 30, 2021 , we
repurchased 10 million shares of our class A common stock in the open market for
$2.2 billion . As of June 30, 2021 , our repurchase program had remaining
authorized funds of $7.8 billion . See Note 9-Stockholders' Equity to our
unaudited consolidated financial statements.
Payments volume and processed transactions. Payments volume is the primary
driver for our service revenues, and the number of processed transactions is the
primary driver for our data processing revenues.
For the three and nine months ended March 31, 2021 (1), nominal payments volume
growth in the U.S. was 18% and 11%, respectively, driven mainly by consumer
debit. For the three and nine months ended March 31, 2021 , nominal international
payments volume growth was 10% and 4%, respectively, positively impacted by
movements in U.S. dollar exchange rates. For the same comparable periods,
international payments volume growth on a constant-dollar basis, which excludes
the impact of exchange rate movements, was 6% and 3%, respectively. Processed
transactions increased as the business laps the initial impacts of COVID-19
starting in March 2020 and the increase also reflects the ongoing worldwide
shift to electronic payments.
31
--------------------------------------------------------------------------------
Table of Contents
The following table presents nominal payments and cash volume:
U.S. International Visa Inc.
Three Months Ended March 31,(1) Three Months Ended March 31,(1) Three Months Ended March 31,(1)
2021 2020 % Change(2) 2021 2020 % Change(2) 2021 2020 % Change(2)
(in billions, except percentages)Nominal payments volume Consumer credit$ 384 $ 371 3 %$ 583 $ 567 3 %$ 967 $ 938 3 % Consumer debit(3) 607 451 34 % 584 490 19 % 1,191 942 26 % Commercial(4) 167 160 4 % 99 91 9 % 265 251 6 % Total nominal payments volume(2) 1,157 983 18 % 1,266 1,148 10 % 2,423 2,131 14 % Cash volume 158 139 14 % 463 508 (9) % 621 647 (4) % Total nominal volume(2),(5)$ 1,315 $ 1,122 17 %$ 1,729 $ 1,656 4 %$ 3,044 $ 2,778 10 % U.S. International Visa Inc. Nine Months Ended March 31,(1) Nine Months Ended March 31,(1) Nine Months Ended March 31,(1) 2021 2020 % Change(2) 2021 2020 % Change(2) 2021 2020 % Change(2) (in billions, except percentages)
Nominal payments volume Consumer credit$ 1,175 $ 1,200 (2) %$ 1,777 $ 1,874 (5) %$ 2,952 $ 3,074 (4) % Consumer debit(3) 1,717 1,356 27 % 1,782 1,528 17 % 3,500 2,884 21 % Commercial(4) 501 502 - % 296 299 (1) % 797 801 - % Total nominal payments volume(2) 3,393 3,057 11 % 3,855 3,702 4 % 7,248 6,759 7 % Cash volume 466 431 8 % 1,443 1,649 (12) % 1,909 2,081 (8) % Total nominal volume(2),(5)$ 3,859 $ 3,489 11 %$ 5,298 $ 5,351 (1) %$ 9,158 $ 8,840 4 % The following table presents nominal and constant payments and cash volume growth: InternationalVisa Inc. InternationalVisa Inc. Three Months Three Months Nine Months Nine Months EndedMarch 31 , EndedMarch 31 , EndedMarch 31 , EndedMarch 31, 2021 vs. 2020(1),(2) 2021 vs. 2020(1),(2) 2021 vs. 2020(1),(2) 2021 vs. 2020(1),(2) Nominal Constant(6) Nominal Constant(6) Nominal Constant(6) Nominal Constant(6) Payments volume growth Consumer credit growth 3 % (1) % 3 % 1 % (5) % (6) % (4) % (5) % Consumer debit growth(3) 19 % 15 % 26 % 24 % 17 % 16 % 21 % 21 % Commercial growth(4) 9 % 4 % 6 % 4 % (1) % (2) % - % (1) % Total payments volume growth 10 % 6 % 14 % 11 % 4 % 3 % 7 % 7 % Cash volume growth (9) % (7) % (4) % (3) % (12) % (9) % (8) % (5) % Total volume growth 4 % 2 % 10 % 8 % (1) % - % 4 % 4 % (1)Service revenues in a given quarter are assessed based on nominal payments volume in the prior quarter. Therefore, service revenues reported for the three and nine months endedJune 30, 2021 and 2020, respectively, were based on nominal payments volume reported by our financial institution clients for the three and nine months endedMarch 31, 2021 and 2020, 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 theVisa , 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 byVisa . 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 theU.S. dollar. 32 -------------------------------------------------------------------------------- Table of Contents The following table provides the number of transactions involving cards and other form factors carrying theVisa , Visa Electron, Interlink, V PAY and PLUS cards processed onVisa's networks during the periods presented: Three Months Ended Nine Months Ended June 30, June 30, % % 2021 2020 Change(1) 2021 2020 Change(1) (in millions, except percentages) Visa processed transactions 42,561 30,676 39 % 119,418 103,391 16 % (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 theU.S. and internationally: Three Months Ended Nine Months Ended June 30, June 30, $ % $ % 2021 2020 Change Change(1) 2021 2020 Change Change(1) (in millions, except
percentages)
U.S.$ 2,806 $ 2,380 $ 426 18 %$ 8,156 $ 7,747 $ 409 5 % International 3,324 2,457 867 35 % 9,390 8,998 392 4 % Net revenues$ 6,130 $ 4,837 $ 1,293 27 %$ 17,546 $ 16,745 $ 801 5 % (1)Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers. During the three-month comparable periods, net revenues increased primarily due to the growth in nominal payments volume, processed transactions and nominal cross-border volume, driven by fewer COVID-19 restrictions, partially offset by higher client incentives. During the nine-month comparable periods, net revenues increased primarily due to the growth in nominal payments volume and processed transactions, partially offset by higher client incentives and lower nominal cross-border volume. Our net revenues are impacted by the overall strengthening or weakening of theU.S. dollar as payments volume and related revenues denominated in local currencies are converted toU.S. dollars. During the three and nine months endedJune 30, 2021 , exchange rate movements, which are partially mitigated by our hedging program, positively impacted our net revenues by approximately one percentage point and one half of a percentage point, respectively. The following table sets forth the components of our net revenues: Three Months Ended Nine Months Ended June 30, June 30, $ % $ % 2021 2020 Change Change(1) 2021 2020 Change Change(1) (in millions, except percentages)
Service revenues$ 2,828 $ 2,409 $ 419 17 %$ 8,350 $ 7,587 $ 763 10 % Data processing revenues 3,327 2,525 802 32 % 9,356 8,100 1,256 15 % International transaction revenues 1,696 1,102 594 54 % 4,635 4,953 (318) (6) % Other revenues 409 314 95 31 % 1,185 1,071 114 11 % Client incentives (2,130) (1,513) (617) 41 % (5,980) (4,966) (1,014) 20 % Net revenues$ 6,130 $ 4,837 $ 1,293 27 %$ 17,546 $ 16,745 $ 801 5 %
(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 14% and 7% growth in nominal payments volume during the three and nine-month comparable periods, respectively. Service revenues were also impacted by select pricing modifications and business mix.
33
--------------------------------------------------------------------------------
Table of Contents
•Data processing revenues increased mainly due to overall growth in processed
transactions of 39% and 16% during the three and nine-month comparable periods,
respectively, as the business laps the initial impacts of COVID-19 starting in
March 2020 and various markets relaxed restrictions. For the three-month
comparable period, the growth of data processing revenues was negatively
impacted by an unfavorable business mix.
•International transaction revenues increased primarily due to growth in nominal
cross-border volumes, excluding transactions within Europe , of 62% during the
three-month comparable period, as the business laps the initial impacts of
COVID-19 starting in March 2020 and border restrictions were relaxed in various
markets. The decrease for the nine-month comparable period is mainly due to a
decline in nominal cross-border volumes, excluding transactions within Europe ,
of 7%. International transaction revenues were also impacted by fluctuations in
the volatility of a broad range of currencies and business mix.
•Other revenues increased as the business laps the initial impacts of COVID-19
starting in March 2020 , driven by higher consulting and data services revenues.
•Client incentives increased in correlation with the increase in payments
volumes during the three and nine-month comparable periods. 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 Nine Months Ended
June 30, June 30,
$ % $ %
2021 2020 Change Change(1) 2021 2020 Change Change(1)
(in millions, except percentages)Personnel$ 1,098 $ 941 $ 157 17 %$ 3,193 $ 2,863 $ 330 12 % Marketing 268 174 94 54 % 679 683 (4) (1) % Network and processing 186 172 14 8 % 538 536 2 - % Professional fees 108 95 13 13 % 273 304 (31) (10) % Depreciation and amortization 204 197 7 3 % 602 571 31 5 % General and administrative 204 258 (54) (21) % 770 840 (70) (8) % Litigation provision (2) 1 (3) (309) % 2 9 (7) (73) % Total operating expenses$ 2,066 $ 1,838 $ 228 12 %$ 6,057 $ 5,806 $ 251 4 % (1)Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers. •Personnel expenses increased primarily due to increases in headcount and higher incentive compensation, reflecting our strategy to invest in future growth. •Marketing expenses increased during the three months endedJune 30, 2021 as we lapped reductions in spending in the prior year at the outset of COVID-19 as well as higher spending in client marketing and various campaigns, including the Olympic Games Tokyo 2020, which were postponed until summer 2021. During the nine months endedJune 30, 2021 , marketing expenses decreased primarily due to the planned delay in spending to the second half of fiscal 2021. •Network and processing expenses increased mainly due to continued technology and processing network investments to support growth. •Professional fees, which were primarily third party fees related to various corporate projects, increased during the three months endedJune 30, 2021 mainly due to the planned delay of our spending to the second half of fiscal 2021. During the nine months endedJune 30, 2021 , professional fees decreased reflecting non-recurring expenses in the prior year, partially offset by planned delay of our spending to the second half of fiscal 2021. 34 -------------------------------------------------------------------------------- Table of Contents •Depreciation and amortization expenses increased primarily due to additional depreciation and amortization from our on-going investments, including acquisitions. •General and administrative expenses decreased in the three months endedJune 30, 2021 , primarily as a result of favorable foreign currency fluctuations and lower indirect taxes, partially offset by increased usage of travel related product benefits. In the nine months endedJune 30, 2021 , expenses decreased due to lower travel expenses, lower usage of travel related product benefits and favorable foreign currency fluctuations, partially offset by a one-time charge to record our estimate of probable additional indirect taxes, related to prior periods, for which we could be liable as a result of certain changes in applicable laws. Non-operating Income (Expense) The following table sets forth the components of our non-operating income (expense): Three Months Ended Nine Months Ended June 30, June 30, $ % $ % 2021 2020 Change Change(1) 2021 2020 Change Change(1) (in millions, except percentages) Interest expense, net$ (131) $ (142) $ 11 (8) %$ (388) $ (371) $ (17) 4 % Investment income and other 456 75 381 499 % 664 167 497 296 % Total non-operating income (expense)$ 325 $ (67) $ 392 (591) %$ 276 $ (204) $ 480 (235) % (1)Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers. •Interest expense, net decreased during the three months endedJune 30, 2021 primarily as a result of lower interest related to income tax liabilities. Interest expense, net increased during the nine-month comparable period primarily due to the issuance of debt in fiscal 2020, partially offset by lower interest due to discrete tax benefits. •Investment income and other increased in the three and nine months endedJune 30, 2021 primarily due to higher gains on our equity investments, partially offset by lower interest income on our cash and investments. Effective Income Tax Rate The following table sets forth our effective income tax rates: Three Months Ended Nine Months Ended June 30, June 30, 2021 2020 2021 2020 Effective income tax rate 41 % 19 % 26 % 19 %
The effective income tax rates for the three and nine months ended
•during the three months endedJune 30, 2021 , a$1.0 billion non-recurring, non-cash tax expense related to the remeasurement ofUK deferred tax liabilities, as discussed below; •during the three months endedJune 30, 2021 , a$51 million tax benefit as a result of a tax position taken on certain expenses; and •during the nine months endedJune 30, 2021 ,$147 million of tax benefits as a result of the conclusion of audits by taxing authorities. OnJune 10, 2021 , theUK enacted legislation that will increase the tax rate from 19% to 25%, effectiveApril 1, 2023 . As a result, we recorded a non-recurring, non-cash tax expense related to the remeasurement of our netUK deferred tax liabilities, primarily related to intangibles recorded upon the acquisition of Visa Europe in fiscal 2016. 35 -------------------------------------------------------------------------------- Table of Contents Liquidity and Capital Resources Cash Flow Data The following table summarizes our cash flow activity for the periods presented: Nine Months Ended June 30, 2021 2020 (in millions) Total cash provided by (used in): Operating activities$ 11,256 $ 8,344 Investing activities 1,546 2,308 Financing activities (10,791) (4,723)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
92 173
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
$
2,103
Operating activities. Cash provided by operating activities for the nine months endedJune 30, 2021 was higher than the prior-year comparable period primarily due to growth in our underlying business, lower client incentive payments and the timing and impact of COVID-19 on settlement in the prior-year period. Investing activities. Cash provided by investing activities for the nine months endedJune 30, 2021 decreased primarily due to higher purchases of investment securities, partially offset by higher sales and maturities of investment securities as compared to the prior-year period. Financing activities. Cash used in financing activities for the nine months endedJune 30, 2021 was higher than the prior-year comparable period primarily due to the$3.0 billion principal debt payment upon maturity of our senior notes inDecember 2020 and the absence of proceeds received from the issuance of senior notes in the prior year, partially offset by lower share repurchases. See Note 7-Debt and Note 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 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. 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. Uses of Liquidity There has been no significant change to our primary uses of liquidity sinceSeptember 30, 2020 , except as discussed below. Common stock repurchases. During the nine months endedJune 30, 2021 , we repurchased 27 million shares of our class A common stock for$5.7 billion . As ofJune 30, 2021 , our repurchase program had remaining authorized funds of$7.8 billion . See Note 9-Stockholders' Equity to our unaudited consolidated financial statements. 36 -------------------------------------------------------------------------------- Table of Contents Dividends. During the nine months endedJune 30, 2021 , we declared and paid$2.1 billion in dividends to holders of our common and preferred stock. OnJuly 23, 2021 , our board of directors declared a cash dividend in the amount of$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 andEurope preferred stock on an as-converted basis), which will be paid onSeptember 1, 2021 , to all holders of record as ofAugust 13, 2021 . See Note 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 preferred and class B and C common stock will share ratably on an as-converted basis in such future dividends. Senior notes. During the nine months endedJune 30, 2021 , we repaid$3.0 billion of principal upon maturity of our senior notes dueDecember 14, 2020 . See Note 7-Debt to our unaudited consolidated financial statements. Pending Acquisitions. OnJune 24, 2021 , we entered into a definitive agreement to acquire Tink for €1.8 billion, inclusive of cash and retention incentives. This acquisition is subject to customary closing conditions, including regulatory reviews and approvals. OnJuly 22, 2021 , we entered into a definitive agreement to acquire Currencycloud for a value of £700 million, inclusive of cash and retention incentives. The financial consideration will be reduced by the outstanding equity of Currencycloud that we already own. This acquisition is subject to customary closing conditions, including regulatory reviews and approvals. Accounting Pronouncements Not Yet Adopted InDecember 2019 , theFinancial 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 onOctober 1, 2021 . The adoption is not expected to have a material impact on our consolidated financial statements. InJanuary 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 onOctober 1, 2021 . The adoption is not expected to have a material impact on our consolidated financial statements. InMarch 2020 , the FASB issued ASU 2020-04, which provides optional expedients and exceptions for applyingU.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. Subsequently, the FASB also issued an amendment to this standard. The amendments in the ASU are effective upon issuance throughDecember 31, 2022 . We are evaluating the effect ASU 2020-04 and 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
© Edgar Online, source
