Attached files
| file | filename |
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| EX-99.1 - EXHIBIT 99.1 - VISA INC. | vex991earningsrelease63017.htm |
| 8-K - 8-K - VISA INC. | form8-kearningsrelease63017.htm |
Visa Inc.
Fiscal Third Quarter 2017
Financial Results
July 20, 2017
EHIBIT 99.2
Fiscal Third 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 for fiscal full-year 2017. 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 Third Quarter 2017 Financial Results3
Strong Fiscal Third Quarter Results
Returned approximately $2.1 billion of capital to shareholders
in the form of share repurchases and dividends
GAAP net income of $2.1 billion or $0.86 per share
Net operating revenue of $4.6 billion, an increase of 26%,
driven by inclusion of Europe and continued growth in
payments volume, cross-border volume and processed
transactions
Fiscal Third Quarter 2017 Financial Results4
Quarter ended March – Excludes Europe Co-badge Payments Volume*
Payments Volume
US$ in billions, nominal, except percentages
INTL
558
INTL
958
INTL
445
INTL
572
INTL 113
INTL
386
U.S.
694
U.S.
776
U.S.
334
U.S.
404
U.S.
359
U.S.
372
1,252
1,734
780
976
473
758
INTL = International
Total Visa Inc. Credit Debit
YOY Change
(constant) 38% 25% 58%
YOY Change
(nominal)
25% 60%38%
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.
2016
2017
* As a result of EU regulation changes, effective with the quarter ended December 31, 2016, Europe co-badge volume is no longer included in reported volume.
Fiscal Third Quarter 2017 Financial Results5
Quarter ended June – Excludes Europe Co-badge Payments Volume*
Payments Volume
US$ in billions, nominal, except percentages
YOY Change
(constant) 38% 24% 62%
YOY Change
(nominal) 23% 63%38%
Note: The Company did not include Visa Europe’s payments volume from the acquisition date, June 21, 2016, through June 30, 2016 as the impact was immaterial. 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
600
INTL
1,021
INTL
476
INTL
604
INTL 123
INTL
417
U.S.
749
U.S.
840
U.S.
376
U.S.
446
U.S.
374
U.S.
393
1,349
1,860
852
1,050
497
811
INTL = International
Total Visa Inc. Credit Debit
2016
2017
* As a result of EU regulation changes, effective with the quarter ended December 31, 2016, Europe co-badge volume is no longer included in reported volume.
Fiscal Third Quarter 2017 Financial Results6
Quarter ended June – Excludes Europe Co-badge from Total Transactions*
Transactions
in millions, except percentages
Note: The Company did not include Visa Europe’s payments volume from the acquisition date, June 21, 2016, through June 30, 2016 as the impact was immaterial. 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 40% 44%
Debit
62%
Credit
38%
62%
Debit
66%
Debit
38%
Credit
34%
Credit30,132
42,139
19,778
28,450
Processed TransactionsTotal Transactions
2016
2017
* As a result of EU regulation changes, effective with the quarter ended December 31, 2016, Europe co-badge transactions are no longer included in total transactions.
Fiscal Third Quarter 2017 Financial Results7
Quarter ended March
Total Cards
in millions, except percentages
2,465
864
1,602
3,155
1,060
2,096
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 23% 31%28%
2016
2017
Fiscal Third Quarter 2017 Financial Results8
4,469
(839)
3,630
5,712
(1,147)
4,565
Gross
Revenues
Client
Incentives
Net Operating
Revenues
Fiscal 2016
Fiscal 2017
Revenue – Q3 2017
US$ in millions, except percentages
YOY
Change 37% 26%28%
Fiscal 2017 % of
Gross Revenues 20% 80%
Note: The Company did not include Visa Europe’s financial results in its unaudited consolidated statements of operations from the acquisition date, June 21, 2016, through June 30,
2016 as the impact was immaterial. Figures may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
Fiscal Third Quarter 2017 Financial Results9
Revenue Detail – Q3 2017
US$ in millions, except percentages
1,635
1,541
1,084
209
1,948 1,984
1,571
209
Service Revenues Data Processing
Revenues
International
Transaction Revenues
Other Revenues
Fiscal 2016
Fiscal 2017
YOY
Change 29% 45%19% —
Note: The Company did not include Visa Europe’s financial results in its unaudited consolidated statements of operations from the acquisition date, June 21, 2016, through June 30,
2016 as the impact was immaterial. Figures may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
Fiscal Third Quarter 2017 Financial Results10
Operating Margin – Q3 2017
US$ in millions, except percentages
3,630
3,202
428
1,173
2,457
1,541
3,024
Reported GAAP Fiscal 2016 Adjusted non-GAAP Fiscal 2016 Reported GAAP Fiscal 2017
Net Operating
Revenue
4,565
12%
68% 66%
Note: The Company did not include Visa Europe’s financial results from the acquisition date, June 21, 2016, through June 30, 2016 as the impact was immaterial. Adjusted non-GAAP
financial measures exclude the impact of certain significant items related to the acquisition of Visa Europe. There were no comparable adjustments for fiscal third quarter 2017. Refer
to the accompanying financial tables for further details and a reconciliation of the non-GAAP measures presented. Operating margin is calculated as operating income divided by net
operating revenues. Figures may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
31% 23%— (2) ppt
26% NM(52%) 54 ppt
YOY Change
(Reported GAAP)
YOY Change
(Adjusted non-GAAP)
Operating
Income
Operating
Expenses
Operating
Margin
NM - Not meaningful
Fiscal Third Quarter 2017 Financial Results11
Operating Expenses – Q3 2017
US$ in millions, except percentages
509
189
123 138 120
246
1,877
78
154
0
102
230
0
Reported GAAP Fiscal 2016 Adjusted non-GAAP Fiscal 2016 Reported GAAP Fiscal 2017
698
Note: The Company did not include Visa Europe’s financial results from the acquisition date, June 21, 2016, through June 30, 2016 as the impact was immaterial. Adjusted non-GAAP
financial measures exclude the impact of certain significant items related to the acquisition of Visa Europe. There were no comparable adjustments for fiscal third quarter 2017. Refer
to the accompanying financial tables for further details and a reconciliation of the non-GAAP measures presented. Figures may not recalculate exactly due to rounding. Percentage
changes are calculated based on unrounded numbers.
29%17% (26%) 9% (7%)YOY Change
(Reported GAAP)
37%
Personnel Marketing Network &
Processing
Professional
Fees
Visa Europe
Framework
Agreement loss
100%
Depreciation &
Amortization
General &
Administrative
YOY Change
(Adjusted non-GAAP)
— — — — —30% 49%
221
158
132
Fiscal Third Quarter 2017 Financial Results12
Other Financial Results and Highlights
• Cash, cash equivalents and available-for-sale investment securities of $12.2
billion at the end of the fiscal third quarter
• Adjusted free cash flow of $3.3 billion for the fiscal third quarter
• Capital expenditures of $195 million during the fiscal third quarter
See appendix for reconciliation of adjusted free cash flow to the closest comparable U.S. GAAP financial measure.
Fiscal Third Quarter 2017 Financial Results13
Financial Outlook for Fiscal Full-Year 2017
Annual net revenue
growth Approximately 20% on a nominal dollar basis, including approximately 2.0 ppts of negative foreign currency impact
Client incentives as a
percent of gross
revenues
20.0% to 20.5% range
Annual operating
margin Mid 60s
Effective tax rate Mid 40s on a GAAP basis and approximately 30% on an
adjusted, non-GAAP basis
Annual diluted class A
common stock
earnings per share
growth
Low double-digits on a GAAP nominal dollar basis and
approximately 20% on an adjusted, non-GAAP nominal dollar
basis (see note below), both including approximately 2.5 ppts
of negative foreign currency impact
Note: The financial outlook for fiscal full-year 2017 includes Visa Europe integration expenses of approximately $60 million for the full-year. Differences in our financial outlook for fiscal
full-year 2017 GAAP and non-GAAP financial measures relate to the one-time, non-recurring items that are included in the accompanying reconciliation. Annual adjusted diluted class A
common stock earnings per share growth is derived from adjusted full-year 2016 earnings per share results of $2.84. Refer to the accompanying financial tables for further details and a
reconciliation of the adjusted fiscal full-year 2016 results.
Appendix
Fiscal Third Quarter 2017 Financial Results15
Calculation of Adjusted Free Cash Flow
US$ in millions
A-
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 June 30, 2017, the Company generated adjusted free cash flow of $3.3 billion, and returned $2.1 billion to investors through stock
buybacks of $1.7 billion, and dividends paid of $394 million. During the nine months ended June 30, 2017, the company generated
adjusted free cash flow of $5.9 billion, and returned $6.3 billion(1) to investors through stock buybacks of $5.1 billion, and dividends paid of
$1.2 billion. The Company defines 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.
(1) Funds returned to investors were greater than adjusted free cash flow funded by liquidity sources available to the Company such as cash on hand and the Company’s investment
portfolio.