Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - VISA INC. | vex991earningsrelease033.htm |
| 8-K - 8-K - VISA INC. | form8-kearningsrelease33118.htm |
Visa Inc.
Fiscal Second Quarter 2018
Financial Results
April 25, 2018
Fiscal Second Quarter 2018 Financial Results2 ©2018 Visa. All rights reserved.
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 2018. 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, litigation and governmental investigation 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 and to migrate European activity onto VisaNet successfully;
• 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, 2017, 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 Second Quarter 2018 Financial Results3 ©2018 Visa. All rights reserved.
Fiscal Second Quarter 2018 Results
in billions, except percentages and per share data
USD
($)
YoY Change
(%)
Net Operating Revenues $5.1 13%
GAAP Net Income $2.6 505%
Adjusted Net Income(1) $2.6 26%
GAAP Earnings Per Share $1.11 523%
Adjusted Earnings Per Share(1) $1.11 30%
Note: Refer to the accompanying financial tables for further details and a reconciliation of the non-GAAP measures presented.
• Double-digit growth in payments volume, cross-border volume and processed transactions
• Increased Fiscal Full-Year 2018 Outlook based on strong performance in the first half
• Returned $2.5B of capital to shareholders in the form of share repurchases and dividends
(1) Adjusted Net Income and Adjusted Earnings Per Share excludes special items in the prior year.
Fiscal Second Quarter 2018 Financial Results4 ©2018 Visa. All rights reserved.
Quarter ended December
Payments Volume
US$ in billions, nominal, except percentages
INTL
1,003
INTL
1,152 INTL
601
INTL
678 INTL
403
INTL
474
U.S.
804
U.S.
881
U.S.
430
U.S.
479
U.S.
374
U.S.
403
1,807
2,033
1,030
1,157
777
877
INTL = International
Total Visa Inc. Credit Debit
YoY Change
(constant) 10% 10% 9%
YoY Change
(nominal)
12% 13%13%
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
Fiscal Second Quarter 2018 Financial Results5 ©2018 Visa. All rights reserved.
Quarter ended March
Current quarter payments volume and other select metrics are provided in the operational performance data supplement in the earnings
release to provide more recent operating data. Service revenues continue to be recognized based on payments volume in the prior quarter.
Payments Volume
US$ in billions, nominal, except percentages
YoY Change
(constant) 11% 10% 11%
YoY Change
(nominal) 14% 16%15%
Note: 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 09
U.S.
575
U.S.
631
U.S.
277
U.S.
313
INTL
960
INTL
1,139 INTL
575
INTL
666 INTL
386
INTL
473
U.S.
776
U.S.
855
U.S.
404
U.S.
446
U.S.
372
U.S.
409
1,736
1,994
979
1,113
758
881
INTL = International
Total Visa Inc. Credit Debit
2017
2018
Fiscal Second Quarter 2018 Financial Results6 ©2018 Visa. All rights reserved.
Quarter ended March
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 10% 12%
Debit
62%
Credit
38%
66%
Debit
66%
Debit
34%
Credit
34%
Credit
39,344
43,166
26,256
29,321
Processed TransactionsTotal Transactions
2017
2018
Fiscal Second Quarter 2018 Financial Results7 ©2018 Visa. All rights reserved.
Quarter ended December
Total Cards
in millions, except percentages
3,132
1,062
2,070
3,250
1,085
2,166
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 2% 5%4%
2016
2017
Fiscal Second Quarter 2018 Financial Results8 ©2018 Visa. All rights reserved.
5,508
(1,031)
4,477
6,362
(1,289)
5,073
Gross
Revenues
Client
Incentives
Net Operating
Revenues
Fiscal 2017
Fiscal 2018
Revenue – Q2 2018
US$ in millions, except percentages
YoY
Change 25% 13%16%
Note: Figures may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
18.7% 20.3%
Client Incentives as a
% of Gross Revenues
1.6ppts
Fiscal Second Quarter 2018 Financial Results9 ©2018 Visa. All rights reserved.
Revenue Detail – Q2 2018
US$ in millions, except percentages
1,993
1,843
1,469
203
2,253
2,127
1,752
230
Service Revenues Data Processing
Revenues
International
Transaction Revenues
Other Revenues
Fiscal 2017
Fiscal 2018
YoY
Change 15% 19%13% 13%
Note: Figures may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
Fiscal Second Quarter 2018 Financial Results10 ©2018 Visa. All rights reserved.
Operating Margin – Q2 2018
US$ in millions, except percentages
1,669
2,808
1,477
3,000
1,737
3,336
Reported GAAP Fiscal 2017 Adjusted non-GAAP Fiscal 2017 Reported GAAP Fiscal 2018
63%
67% 66%
Note: There were no comparable adjustments for second quarter of fiscal 2018. 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.
18% 11%N/A (1)ppt
13% 19%4% 3ppts
YOY Change
(Reported GAAP)
YOY Change
(Adjusted non-GAAP)
4,477
5,073
Net Operating
Revenue
Operating
Income
Operating
Expenses
Operating
Margin
N/A – Not applicable, as there were no non-GAAP adjustments
Fiscal Second Quarter 2018 Financial Results11 ©2018 Visa. All rights reserved.
Operating Expenses – Q2 2018
US$ in millions, except percentages
Note: There were no comparable adjustments for second quarter of fiscal 2018. 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.
13%35% 30% 17% (45)%YOY Change(Reported GAAP)
17% (100)%
YOY Change
(Adjusted non-GAAP) N/A N/A N/A N/A N/AN/A 4%
704
193
150
83
131
824
261
169
108
153
Personnel Marketing Network &
Processing
Professional Fees Depreciation &
Amortization
N/A – Not applicable, as there were no non-GAAP adjustments
406
214 222
Reported GAAP Fiscal 2017 Adjusted non-GAAP Fiscal 2017 Reported GAAP Fiscal 2018
2 0
Litigation
Provision
General &
Administrative
Fiscal Second Quarter 2018 Financial Results12 ©2018 Visa. All rights reserved.
Other Financial Results and Highlights
• Cash, cash equivalents and available-for-sale investment securities of
$14.2 billion at the end of the fiscal second quarter
• Adjusted free cash flow of $2.6 billion for the fiscal second quarter
• Capital expenditures of $213 million during the fiscal second quarter
• On March 7, 2018, the Company acquired Fraedom to strengthen and
expand Visa’s business solutions to meet the evolving needs of the B2B
payments industry
See appendix for reconciliation of adjusted free cash flow to the closest comparable U.S. GAAP financial measure.
Fiscal Second Quarter 2018 Financial Results13 ©2018 Visa. All rights reserved.
Financial Outlook for Fiscal Full-Year 2018
Annual net revenue growth
Low double-digits on a nominal dollar basis, with approximately 1 percentage
point of positive foreign currency impact
Client incentives as a
percentage of gross
revenues
21.5% to 22.0% range
Annual operating expense
growth
Low double-digits adjusted for special items in fiscal 2017 (see note below)
Annual operating margin High 60s
GAAP and adjusted
effective tax rate
21% to 22% range, which includes a 6 percentage point reduction resulting
from U.S. tax reform
Annual diluted class A
common stock earnings per
share growth including the
impact of U.S tax reform
Low-60’s on a GAAP nominal dollar basis and high-20’s on an adjusted, non-
GAAP nominal dollar basis (see note below). Both include approximately 9 to 10
percentage points driven by U.S. tax reform and approximately 1 to 1.5
percentage points of positive foreign currency impact
Note: The financial outlook for fiscal full-year 2018 includes Visa Europe integration expenses of approximately $60 million for the full-year. Annual operating expense growth is derived from
adjusted full-year 2017 operating expenses of $6.0 billion. Annual adjusted diluted class A common stock earnings per share growth is derived from adjusted full-year 2017 earnings per
share results of $3.48. Refer to the accompanying financial tables for further details and a reconciliation of the adjusted fiscal full-year 2017 results.
Appendix
Fiscal Second Quarter 2018 Financial Results15 ©2018 Visa. All rights reserved.
Calculation of Adjusted Free Cash Flow
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 March 31, 2018, the Company generated adjusted free cash flow of $2.6 billion, and returned $2.5 billion to investors through stock
buybacks of $2.0 billion and dividends paid of $490 million. During the six months ended March 31, 2018, the Company generated
adjusted free cash flow of $5.2 billion, and returned $4.7 billion to investors through stock buybacks of $3.8 billion and dividends paid of
$948 million. The Company defines adjusted free cash flow as cash provided by operating activities adjusted to reflect capital investments
made in the business. Adjusted free cash flow is a non-GAAP performance measure and should not be relied upon as a substitute for
measures calculated in accordance with U.S. GAAP. The following table reconciles as-reported net cash provided by operating activities to
non-GAAP adjusted free cash flow.
US$ in millions Three Months Ended March 31, 2018 Six Months Ended March 31, 2018
Net cash provided by operating activities $2,820 $5,582
Less: capital expenditures (213) (354)
Adjusted free cash flow $2,607 $5,228