V 10-Q: Smart Summary

• Recently adopted standard: In November 2025, the FASB issued Accounting Standards Update 2025-09, amending hedge accounting to more closely align with an entity's risk management activities; Visa early adopted this standard on a prospective basis during the three months ended December 31, 2025, and the adoption did not have a material impact on the consolidated financial statements.

• Value-added services revenue: Revenue from value-added services was $3.2B for the three months ended December 31, 2025, up from $2.4B in the prior-year period; this revenue is recognized within data processing, other, and service revenue.
• Deferred revenue: Deferred revenue was $1.9B as of December 31, 2025, up from $1.7B as of September 30, 2025, recorded in accrued liabilities on the consolidated balance sheets.
• Remaining performance obligations: As of December 31, 2025, remaining performance obligations (comprising deferred revenue and contract revenue to be invoiced) were $5.4B; the Company expects approximately half to be recognized as revenue in the next two years and the remainder thereafter, subject to contract modifications and terminations.

• Restricted cash components: As of December 31, 2025, restricted cash and restricted cash equivalents included U.S. litigation escrow of $3.3B, customer collateral of $3.7B, and amounts in prepaid expenses and other current assets of $1.4B, compared to $3B, $3.6B, and $1.2B, respectively, as of September 30, 2025.
• Total cash reconciliation: Total cash, cash equivalents, restricted cash and restricted cash equivalents was $23.2B as of December 31, 2025, down from $25B as of September 30, 2025, driven primarily by a decline in unrestricted cash and cash equivalents from $17.2B to $14.8B.

• U.S. litigation escrow: The U.S. litigation escrow account balance rose from $3B at the start of the three months ended December 31, 2025 to $3.3B at period end, reflecting $500M in deposits and $190M in net payments to opt-out merchants (associated with the interchange multidistrict litigation); in the comparable prior-year period the balance moved from $3.1B to $3.1B with no deposits and $23M net recovery.
• Europe preferred stock balances: During the three months ended December 31, 2025, Series B preferred stock declined from $67M to $7M and Series C from $165M to $116M, driven primarily by $60M and $49M in recovery through conversion rate adjustments, respectively; VE territory covered losses of $3M were recorded in the right to recover for covered losses account, which moved from ($124M) to ($19M) after $108M of recovery through conversion rate adjustments.
• As-converted recovery capacity: As of December 31, 2025, total recovery for covered losses available was $1.3B on an as-converted basis (vs. $1.3B as of September 30, 2025), based on 2 million Series B and 3 million Series C preferred shares outstanding, conversion rates of 0.5960 and 0.7170, and a class A common stock closing price of $350.71; book value of total recovery available was $104M as of December 31, 2025 vs. $108M as of September 30, 2025.
• Conversion rate mechanism: Adjustments to the class A common stock conversion rates applicable to Series B and C preferred stock 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.

• Recurring fair value hierarchy: Level 1 assets totaled $14.2B at December 31, 2025 (vs. $16.3B at September 30, 2025), comprising money market funds ($12.3B and $25M across cash equivalents and other assets), U.S. Treasury securities ($1.5B), and marketable equity securities ($428M); Level 2 assets totaled $263M (vs. $367M), consisting of U.S. government-sponsored debt securities ($180M) and derivative instruments ($83M); Level 1 liabilities were $300M (deferred compensation) and Level 2 liabilities were $230M (derivative instruments).
• Debt securities — amortized cost vs. fair value: At December 31, 2025, U.S. government-sponsored debt securities had amortized cost of $179M and fair value of $180M; U.S. Treasury securities had amortized cost of $1.5B and fair value of $1.5B; total gross unrealized gains were $14M with no unrealized losses; $1.3B matures within one year and $356M matures after one year through five years.
• Non-marketable equity securities (Level 3): Carrying amount was $1.1B at December 31, 2025 (vs. $1.1B at September 30, 2025), against an initial cost basis of $714M, with cumulative upward adjustments of $567M and downward adjustments including impairment of ($219M); in the three months ended December 31, 2025, upward adjustments were $3M and downward adjustments were $0, compared to $0 upward and ($91M) downward in the prior-year quarter.
• Debt fair value disclosure: As of December 31, 2025, the carrying value of debt was $21.2B vs. an estimated fair value of $19.4B (Level 2); as of September 30, 2025, carrying value was $25.2B vs. estimated fair value of $23.3B; the annual impairment review of indefinite-lived intangible assets and goodwill as of February 1, 2025 concluded no impairment, and no events or changes in circumstances indicated impairment as of December 31, 2025.

Uncommenced leases: As of December 31, 2025, the Company had additional leases not yet commenced with estimated future payments of $560M; these leases are expected to commence between fiscal 2027 and 2029 with lease terms between 9 and 14 years.

• 3.15% Senior Notes maturity: During the three months ended December 31, 2025, the Company repaid $4B of principal upon maturity of its senior notes due December 2025, reducing total debt from $25.4B to $21.4B.
• Current vs. long-term classification: As of December 31, 2025, current maturities of debt were $1.6B (down from $5.6B at September 30, 2025) and long-term debt was $19.6B (versus $19.6B), reflecting the payoff of the December 2025 notes and reclassification of the 1.50% Euro Senior Notes due June 2026 as current.
• Carrying value adjustments: Total carrying value of debt was $21.2B at December 31, 2025, after deducting unamortized discounts and debt issuance costs of $158M and hedge accounting fair value adjustments of ($74M; the fair value adjustments represent interest rate swap agreements entered into on a portion of the outstanding senior notes.

• Settlement guarantee: The Company indemnifies financial institution clients for settlement losses if another client fails to fund settlement obligations; exposure is limited to unsettled Visa payment transactions at any point in time, which vary significantly day to day.
• Settlement exposure: For the three months ended December 31, 2025, maximum daily settlement exposure was $168.6B and average daily settlement exposure was $98.4B.
• Collateral held: As of December 31, 2025 and September 30, 2025, total collateral was $8.8B for both periods, comprising restricted cash, letters of credit, guarantees, pledged securities, and beneficial rights to trust assets.
• Loss history and future obligations: The Company states it has historically experienced minimal losses under its settlement risk guarantee; future obligations under the guarantee are not determinable as they depend on future events, but could be material.

Single reportable segment: Visa operates as one reportable segment, Payment Services, reflecting that all activities are interrelated and significant operating decisions are based on analysis of Visa as a single global business.

CODM and performance measure: The Chief Executive Officer serves as CODM and uses consolidated net income to assess performance and allocate resources — applied in the annual budgeting process and to monitor current-period performance against budget and prior-period results.

Asset information: The CODM does not evaluate segment performance using asset information.

Significant expenses: Significant expenses regularly provided to the CODM are presented on the consolidated statements of operations and are included within consolidated net income.

• Share repurchases: In the three months ended December 31, 2025, the Company repurchased 11 million shares in the open market at an average cost of $342.13 per share for a total cost of $3.8B (including applicable taxes), versus 13 million shares at $300.61 per share for $3.9B in the prior-year quarter; unsettled repurchases were $40M as of December 31, 2025. The board authorized a $30B repurchase program in April 2025 with no expiration date, with $21.1B remaining as of December 31, 2025; all prior programs have been completed.
• U.S. retrospective responsibility plan: A $500M deposit into the U.S. litigation escrow account in the three months ended December 31, 2025 reduced as-converted class B-1 and B-2 shares by 1 million equivalent class A shares at an effective price of $354.46 per share; no deposit occurred in the prior-year quarter.
• Europe retrospective responsibility plan: VE territory covered loss recoveries via conversion rate adjustments totaled $60M (Series B) and $49M (Series C) in the three months ended December 31, 2025, at an effective price of $330.96 per share for both series, versus $5M and $3M, respectively, at $312.39 per share in the prior-year quarter; the reduction in equivalent class A shares was less than 1 million for each series in both periods.
• Dividends: The Company declared and paid dividends of $1.3B in the three months ended December 31, 2025 versus $1.2B in the prior-year quarter; on January 27, 2026, the board declared a quarterly cash dividend of $0.67 per share of class A common stock, payable March 2, 2026 to holders of record as of February 10, 2026.

Share classes: The company has 4 economic share classes — Class A, B-1, B-2, and C common stock — plus participating securities; diluted Class A EPS includes the assumed as-converted basis of all other classes and incremental common stock equivalents under the treasury stock method, which were not material for either period.

• EPS, current quarter: For the three months ended December 31, 2025, basic/diluted EPS was $3.03 for Class A (1,687 million weighted-average basic shares; 1,933 million diluted), $4.71 for Class B-1, $4.61/$4.61 for Class B-2, and $12.13/$12.11 for Class C; net income was $5.9B.
• EPS, prior-year quarter: For the three months ended December 31, 2024, basic/diluted EPS was $2.58 for Class A (1,729 million basic shares; 1,985 million diluted), $4.04 for Class B-1, $3.99/$3.98 for Class B-2, and $10.33/$10.32 for Class C; net income was $5.1B.

• EIP grants (Q2 FY2026): For the three months ended December 31, 2025, the Company granted 714,321 non-qualified stock options (weighted-average grant date fair value $76.23, weighted-average exercise price $324.13), 2,458,039 restricted stock units (weighted-average grant date fair value $324.82), and 381,324 performance shares at maximum (weighted-average grant date fair value $344.15) under the amended and restated 2007 Equity Incentive Compensation Plan (EIP).
• Compensation cost: Share-based compensation cost related to the EIP was $221M for the three months ended December 31, 2025, compared to $215M for the three months ended December 31, 2024.

• Effective tax rate: The effective income tax rate fell to 13% for the three months ended December 31, 2025, from 17% for the three months ended December 31, 2024, partly driven by a $333M deferred tax benefit recognized due to a change in U.S. taxation of certain foreign earnings.
• Unrecognized tax benefits: Gross unrecognized tax benefits increased $13M and net unrecognized tax benefits increased $11M for the three months ended December 31, 2025, with the change related to various tax positions across several jurisdictions.
• IRS examination/appeal: The IRS completed its examination of U.S. federal income tax returns for fiscal 2016 through 2018; the Company is filing an appeal due to an unresolved issue related to certain income tax deductions.

Legal Proceedings

• Interchange MDL – U.S. Covered Litigation (accrual $3,198M as of Dec 31, 2025): Visa and Mastercard entered superseding amended settlement on Nov 10, 2025 for Injunctive Relief Class; $707M additional accrual recorded and $500M deposited into escrow this quarter; settlements reached covering ~87% of opted-out merchant sales volume.
• VE Territory Covered Litigation (accrual $5M as of Dec 31, 2025): Visa filed jurisdictional challenge in Dutch class action on December 17, 2025; losses recovered via adjustments to class A conversion rates on series B and C preferred stock.
• U.S. Securities Class Action (Jan 2026): Court granted Visa's motion to dismiss amended complaint with leave to amend on Dec 10, 2025; plaintiff filed second amended complaint Jan 9, 2026; Visa filed motion to dismiss Jan 23, 2026.
• Debit Surcharge Class Action (Dec 2025): Court granted Visa's motion to dismiss without further leave to amend on Dec 12, 2025; plaintiff appealed then subsequently dismissed its appeal.
• U.S. ATM Access Fee Litigation (Dec 2025): Plaintiffs in Burke filed motion for preliminary approval of class settlement with Visa and Mastercard on December 18, 2025.
• MiCamp Solutions (Dec 2025): Court granted Visa's motion to dismiss and dismissed plaintiffs' case without further leave to amend on December 11, 2025.
• German ATM Litigation (pending): Several of Visa's jurisdictional challenges are pending in the German Federal Court of Justice.

• Business description: Visa is a global payments technology company providing transaction processing services (primarily authorization, clearing and settlement) across more than 200 countries and territories via VisaNet; it is not a financial institution and does not issue cards, extend credit, or set rates and fees.
• Net revenue: Net revenue grew 15% to $10.9B for the three months ended December 31, 2025, driven primarily by growth in nominal cross-border volume, processed transactions, and nominal payments volume, partially offset by higher client incentives; exchange rate movements added approximately one percentage point to growth.
• Operating expenses: GAAP operating expenses rose 27% to $4.2B, primarily driven by a $707M additional accrual related to the interchange multidistrict litigation; non-GAAP operating expenses increased 16% to $3.4B, driven by higher personnel, marketing, and general and administrative expenses; exchange rate movements added approximately one-and-a-half percentage points to GAAP expense growth.
• Capital return: Visa repurchased 11 million shares of class A common stock for $3.8B during the three months ended December 31, 2025, with $21.1B remaining under the share repurchase program as of December 31, 2025.
• Non-GAAP adjustments: Key items excluded from non-GAAP results include a $707M litigation provision (interchange MDL, covered under U.S. retrospective responsibility plan), $54M amortization of acquired intangibles, $12M acquisition-related costs, and a $333M deferred tax benefit arising from a change in U.S. taxation of certain foreign earnings; the deferred tax benefit reduced the GAAP effective tax rate to 13.0% versus the non-GAAP rate of 18.4%.

• Consumer credit growth: Consumer credit payments volume grew 7% for the most recent period, following growth rates of 9%, 9%, 8%, and 8% in the four prior comparable periods.
• Consumer debit growth: Consumer debit payments volume (including consumer prepaid and Interlink volume) grew 8% for the most recent period, following growth rates of 13%, 10%, 10%, and 9%.
• Commercial growth: Commercial volume (including large, medium and small business credit and debit, as well as commercial prepaid) grew 8%, following prior period growth rates of 15%, 14%, 10%, and 10%.
• Processed transactions: Visa processed transactions totaled 69,400 million for the three months ended December 31, 2025, up 9% from 63,797 million in the three months ended December 31, 2024.

• Overall growth: Net revenue increased 15% to $10.9B in the three months ended December 31, 2025 from $9.5B in the prior-year comparable period, driven primarily by growth in nominal cross-border volume, processed transactions, and nominal payments volume, partially offset by higher client incentives.
• FX impact: Exchange rate movements increased net revenue growth by approximately one percentage point for the three months ended December 31, 2025.
• Client incentives: Client incentives grew 12% to ($4.3B), partially offsetting revenue growth across all other components.

• Service revenue: Increased over the three-month prior-year comparable period primarily due to growth in nominal payments volume of 9%, select pricing modifications, and growth in card benefits.
• Data processing revenue: Increased over the three-month prior-year comparable period primarily due to growth in processed transactions of 9%, select pricing modifications, growth in value-added services, and higher cross-border transaction mix.
• International transaction revenue: Increased over the three-month prior-year comparable period primarily due to growth in nominal cross-border volume of 15% (excluding transactions within Europe), partially offset by lower volatility of a broad range of currencies and business mix.
• Value-added services revenue: Was $3.2B for the three months ended December 31, 2025 vs. $2.4B for the three months ended December 31, 2024, an increase of 32%, primarily due to growth in Issuing Solutions, Acceptance Solutions, and Advisory and Other Services.
• Client incentives: Increased over the three-month prior-year comparable period primarily due to growth in payments volume; future amounts will vary based on changes in performance expectations, actual client performance, contract amendments, or execution of new contracts.

• Personnel: Personnel expenses decreased 3% to $1.8B from $1.8B, primarily due to severance costs in the prior year to realign organizational structure, partially offset by a higher number of employees and compensation focused on areas that will drive higher long-term growth, including acquisitions.
• Marketing and professional fees: Marketing expenses increased 34% to $410M from $306M due to higher spending in various campaigns, including for client marketing and the FIFA World Cup 2026™; professional fees rose 46% to $208M from $143M due to higher legal fees and higher expenses associated with client engagements.
• Depreciation and litigation provision: Depreciation and amortization increased 16% to $326M from $282M due to additional amortization and depreciation from ongoing investments and acquisitions; litigation provision surged to $708M from $44M (described as NM) primarily due to higher accruals related to the U.S. covered litigation.

• Investment income (expense) and other: Rose 23% to $183M in the three months ended December 31, 2025 (from $148M), primarily due to lower losses on equity investments, partially offset by lower interest income on cash and investments.
• Interest expense: Increased 7% to ($194M) from ($182M) in the prior-year comparable period.
• Total non-operating result: Improved 65% to ($11M) from ($34M), reflecting the net effect of higher investment income and modestly higher interest expense.

Rate decrease driver: The effective income tax rate fell from 17% to 13% in the three months ended December 31, 2025, primarily due to a $333M deferred tax benefit recognized as a result of a change in the U.S. taxation of certain foreign earnings.

• Operating cash flow: Cash provided by operating activities was $6.8B for the three months ended December 31, 2025, up from $5.4B in the prior-year comparable period, primarily due to growth in the underlying business.
• Investing cash flow: Cash provided by investing activities was $361M, down from $790M in the prior-year period, primarily due to lower proceeds from maturities and sales of investment securities, partially offset by the absence of cash paid for acquisitions.
• Financing cash flow: Cash used in financing activities was $9B, up from $5.5B in the prior-year period, primarily due to the principal debt repayment upon maturity of senior notes due December 2025.

• Sources of liquidity: Primary sources are cash on hand, cash flow from operations, the investment portfolio, and access to equity and borrowing arrangements; operational funds are held in cash equivalents and short- or long-term investment securities based on funding requirements, access to liquidity, and returns.
• Adequacy assessment: Based on current cash flow budgets and forecasts of short- and long-term liquidity needs, management believes current and projected sources of liquidity will be sufficient to meet projected liquidity needs for more than the next 12 months.

• Share repurchases: Repurchased class A common stock in the open market for $3.8B during the three months ended December 31, 2025; remaining authorized funds under the share repurchase program were $21.1B as of December 31, 2025.
• Dividends: Declared and paid $1.3B in dividends to holders of common and preferred stock for the three months ended December 31, 2025; on January 27, 2026, the board declared a quarterly cash dividend of $0.67 per share of class A common stock (on an as-converted basis for all other outstanding common and preferred stock), with management expecting to continue quarterly cash dividends subject to board approval.
• Senior notes: Repaid $4B of principal upon maturity of senior notes due December 2025; a principal payment of €1.4 billion ($1.6B) on senior notes is due June 2026, for which management states sufficient liquidity exists.
• Litigation escrow: Deposited $500M into the U.S. litigation escrow account during the three months ended December 31, 2025 to address claims associated with the interchange multidistrict litigation; the account balance as of December 31, 2025 was $3.3B, reflected as restricted cash on the consolidated balance sheets.

• ASU 2023-09 (income tax disclosures): Issued December 2023, requires disaggregated effective tax rate reconciliation and income taxes paid disclosures; effective for annual periods beginning October 1, 2025, with prospective application (retrospective option available); company is currently evaluating the impact on its disclosures.
• ASU 2024-03 (expense disaggregation): Issued November 2024 (with subsequent amendment), requires disclosure of additional information about specific expense categories underlying income statement line items; effective for annual periods beginning October 1, 2027 and interim periods beginning October 1, 2028, with prospective or retrospective application; company is currently evaluating the impact on its disclosures.
• ASU 2025-06 (internal-use software): Issued September 2025, eliminates project stage-based capitalization and clarifies the probable-to-complete threshold for commencing capitalization of software costs; effective for annual and interim periods beginning October 1, 2028, with prospective, retrospective, or modified transition methods available; company is currently evaluating the impact on its consolidated financial statements.