Attached files
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| 8-K - 8-K - VISA INC. | earningsrelease123116.htm |
| EX-99.1 - EXHIBIT 99.1 - VISA INC. | vex991123116earningsrelease.htm |
Visa Inc.
Fiscal First Quarter 2017
Financial Results
February 2, 2017
Fiscal First Quarter 2017 Financial Results2
This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that relate to, among
other things, our future operations, prospects, developments, strategies, business growth and financial outlook. Forward-looking statements generally are
identified by words such as "believes," "estimates," "expects," "intends," "may," "projects," “outlook”, "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.
Actual results could differ materially from those expressed in, or implied by, our forward-looking statements due to a variety of factors, including, but not
limited to:
• increased oversight and regulation of the global payments industry and our business;
• impact of government-imposed restrictions on payment systems;
• outcome of tax and litigation matters;
• increasingly intense competition in the payments industry, including competition for our clients and merchants;
• proliferation and continuous evolution of new technologies and business models;
• our ability to maintain relationships with our clients, merchants and other third parties;
• brand or reputational damage;
• management changes;
• impact of global economic, political, market and social events or conditions;
• exposure to loss or illiquidity due to settlement guarantees;
• uncertainty surrounding the impact of the United Kingdom’s withdrawal from the European Union;
• cyber security attacks, breaches or failure of our networks;
• failure to maintain interoperability with Visa Europe’s systems;
• our ability to successfully integrate and manage our acquisitions and other strategic investments; and
• other factors described in our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the year
ended September 30, 2016, 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.
Forward-Looking Statements
Fiscal First Quarter 2017 Financial Results3
Solid Fiscal First Quarter Results
Adjusted net income and diluted EPS growth of 23% and
23%, respectively
Repurchased 22.3 million shares of class A common stock in
the open market at an average price of $79.77 per share,
using $1.8 billion of cash on hand
GAAP net income of $2.1 billion or $0.86 diluted EPS, an
increase of 7% and 7%, respectively
Accelerating growth in payments volume, cross-border
commerce and processed transactions
Net operating revenue of $4.5 billion, an increase of 25%
Fiscal First Quarter 2017 Financial Results4
Quarter ended September – Includes Europe Co-badge Payments Volume*
Payments Volume
US$ in billions, nominal, except percentages
INTL
571
INTL
1,091
INTL
456
INTL
656
INTL 116
INTL
434
U.S.
693
U.S.
768
U.S.
345
U.S.
409
U.S.
349
U.S.
358
1,264
1,858
800
1,066
464
793
INTL = International
Total Visa Inc. Credit Debit
YOY Change
(constant) 47% 33% 72%
YOY Change
(nominal) 33% 71%47%
Note: On occasion, previously submitted volume information may be updated to reflect revised client submissions or other adjustments. Prior period updates are not material. Figures
may not recalculate exactly due to rounding. Percentage changes and totals are calculated based on unrounded numbers. Constant dollar growth rates exclude the impact of foreign
currency fluctuations against the U.S. dollar in measuring performance.
2015
2016
* Europe volumes, including co-badge, were first included in Visa Inc.’s volumes starting in the quarter ended September 30, 2016. As a result of EU regulation
changes, effective with the quarter ended December 31, 2016, Visa co-badge volume is no longer included in reported volume. Visa Inc. payments volume
growth, excluding Europe co-badge from the quarter ended September 30, 2016, was 38% on both a nominal and constant basis.
38%
Total Visa Inc.
Excluding Europe
Co-badge *
38%
Fiscal First Quarter 2017 Financial Results5
Quarter ended December – Excludes Europe Co-badge Payments Volume*
Payments Volume
US$ in billions, nominal, except percentages
YOY Change
(constant) 39% 25% 63%
YOY Change
(nominal) 24% 62%38%
Note: Current quarter payments volume and other select metrics are provided in the operational performance data supplement in the press release to provide more recent operating
data. Service revenues continue to be recognized based on payments volume in the prior quarter. On occasion, reported payments volume information may be updated to reflect
revised client submissions or other adjustments. Prior period updates are not material. Figures may not recalculate exactly due to rounding. Percentage changes and totals are
calculated based on unrounded numbers. Constant dollar growth rates exclude the impact of foreign currency fluctuations against the U.S. dollar in measuring performance.
INTL
420
INTL
457
INTL 109 INTL 127
U.S.
575
U.S.
631
U.S.
277
U.S.
313
U.S.
298
U.S.
319
INTL
591
INTL
998 INTL
470
INTL
596
INTL 121
INTL
402
U.S.
714
U.S.
803
U.S.
357
U.S.
430
U.S.
357
U.S.
373
1,306
1,800
828
1,025
478
775
INTL = International
Total Visa Inc. Credit Debit
2015
2016
* Europe volumes, including co-badge, were first included in Visa Inc.’s volumes starting in the quarter ended September 30, 2016. As a result of EU regulation
changes, effective with the quarter ended December 31, 2016, Visa co-badge volume is no longer included in reported volume.
Fiscal First Quarter 2017 Financial Results6
Quarter ended December - Excludes Europe Co-badge from Total Transactions*
Transactions
in millions, except percentages
Note: Total transactions represent payments and cash transactions as reported by Visa clients on their operating certificates. On occasion, previously submitted transaction information
may be updated to reflect revised client submissions or other adjustments. Prior period updates are not material. Figures may not recalculate exactly due to rounding. Percentage
changes and totals are calculated based on unrounded numbers. Processed transactions represent transactions involving Visa, Visa Electron, Interlink, V PAY and PLUS cards processed
on Visa’s networks.
Credit
38%
YOY Change 41% 44%
Debit
62%
Credit
38%
62%
Debit
65%
Debit
3
Credit
35%
Credit28,981
40,750
18,986
27,329
Processed TransactionsTotal Transactions
2015
2016
* Europe transactions, including co-badge, were first included in Visa Inc.’s total transactions starting in the quarter ended September 30, 2016. As a result of EU
regulation changes, effective with the quarter ended December 31, 2016, Visa co-badge transactions are no longer included in total transactions.
Fiscal First Quarter 2017 Financial Results7
Quarter ended September
Total Cards
in millions, except percentages
2,442
877
1,565
3,121
1,094
2,027
Visa Inc. Credit Debit
Note: The data presented is based on results reported quarterly by Visa clients on their operating certificates. Estimates may be utilized if data is unavailable. On occasion, previously
submitted card information may be updated to reflect revised client submissions or other adjustments. Prior period updates are not material. Figures may not recalculate exactly due
to rounding. Percentage changes are calculated based on unrounded numbers.
YOY Change 25% 30%28%
2015
2016
Fiscal First Quarter 2017 Financial Results8
4,353
(788)
3,565
5,502
(1,041)
4,461
Gross Revenues Client
Incentives
Net Operating
Revenues
Fiscal 2016
Fiscal 2017
Revenue – Q1 2017
US$ in millions, except percentages
YOY
Change 32% 25%26%
Fiscal 2017 % of
Gross Revenues 19% 81%
Note: Figures may not recalculate exactly due to rounding. Percentages are calculated based on unrounded numbers.
Fiscal First Quarter 2017 Financial Results9
Revenue Detail – Q1 2017
US$ in millions, except percentages
1,645
1,479
1,031
198
1,918 1,892
1,489
203
Service Revenues Data Processing
Revenues
International
Transaction Revenues
Other Revenues
Fiscal 2016
Fiscal 2017
YOY
Change 28% 44%17% 2%
Note: Figures may not recalculate exactly due to rounding. Percentages are calculated based on unrounded numbers.
Fiscal First Quarter 2017 Financial Results10
Operating Margin – Q1 2017
US$ in millions, except percentages
3,565
1,169
2,396
4,461
1,361
3,100
Net Operating
Revenues
Operating
Expenses
Operating
Income
Fiscal 2016
Fiscal 2017
YOY
Change 16% 29%25% 2 ppts
67% 69%
Operating
Margin
Note: Operating margin is calculated as operating income divided by net operating revenues. Figures may not recalculate exactly due to rounding.
Percentages are calculated based on unrounded numbers.
Fiscal First Quarter 2017 Financial Results11
Operating Expenses – Q1 2017
US$ in millions, except percentages
499
194
128
72
120
156
0
571
218
145
80
146
186
15
Personnel Marketing Network &
Processing
Professional
Fees
Depreciation &
Amortization
General &
Administrative
Litigation
Provision
Fiscal 2016
Fiscal 2017
YOY
Change
14% NM20%22%12%13%12%
NM- Not meaningful
Note: Figures may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
Fiscal First Quarter 2017 Financial Results12
Other Financial Results and Highlights
• Cash, cash equivalents and available-for-sale investment securities of $13.2
billion at the end of the fiscal first quarter
• Adjusted free cash flow of $2.3 billion for the fiscal first quarter
• Capital expenditures of $171 million during the fiscal first quarter
• Issued $567 million of commercial paper
See appendix for reconciliation of adjusted free cash flow to the closest comparable U.S. GAAP financial measure.
Fiscal First Quarter 2017 Financial Results13
Financial Outlook for Fiscal Year 2017
Annual net revenue
growth 16% to 18% range on a nominal dollar basis, including 2.0 to 2.5 ppts of negative foreign currency impact
Client incentives as %
of gross revenues 20.5% to 21.5% range
Annual operating
margin Mid 60s
Effective tax rate
Low 30s
Annual diluted class A
common stock
earnings per share
growth
Low 30s on a GAAP nominal dollar basis and mid-teens on an
adjusted, non-GAAP nominal dollar basis (see note below),
both including 2.5 to 3.0 ppts of negative foreign currency
impact
Note: The financial outlook for fiscal full-year 2017 includes Visa Europe integration expenses of approximately $80 million for the full-year. Annual adjusted diluted class A common stock
earnings per share growth is derived from adjusted full-year 2016 earnings per share results of $2.84. Refer to the accompanying financial tables for further details and a reconciliation of
the adjusted fiscal full-year 2016 results.
Appendix
Fiscal First Quarter 2017 Financial Results15
Calculation of Adjusted Free Cash Flow
US$ in millions
A-
Three Months Ended
December 31, 2016
Net cash provided by operating activities 2,508
Less: Capital expenditures (171)
Adjusted Free Cash Flow 2,337
Management believes that presentation of adjusted free cash flow is useful to measure the Company’s generation of cash available to first
re-invest in the business and then return excess cash to shareholders through stock buybacks and cash dividends. During the three months
ended December 31, 2016, we generated adjusted free cash flow of $2.3 billion, and returned $2.2 billion to investors through stock
buybacks of $1.8 billion, and dividends paid of $399 million. We define adjusted free cash flow as cash provided by operating activities
adjusted to reflect capital investments made in the business. Adjusted free cash flow is a non-GAAP performance measure and should not
be relied upon as a substitute for measures calculated in accordance with U.S. GAAP. The following table reconciles as-reported net cash
provided by operating activities to non-GAAP adjusted free cash flow.