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EX-99.1 - EXHIBIT 99.1 - VISA INC. | vex991earningsrelease123.htm |
8-K - 8-K - VISA INC. | form8-kearningsrelease1231.htm |
Visa Inc.
Fiscal First Quarter 2018
Financial Results
February 1, 2018
Exhibit 99.2
Fiscal First 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 First Quarter 2018 Financial Results3 ©2018 Visa. All rights reserved.
Strong Fiscal First Quarter 2018 Results
in billions, except percentages and per share data
USD
($)
Change
(YoY)
Net Operating Revenue $4.86 9%
GAAP Net Income $2.52 22%
Adjusted Net Income $2.54 23%
GAAP Earnings Per Share $1.07 25%
Adjusted Earnings Per Share $1.08 26%
Note: Refer to the accompanying financial tables for further details and a reconciliation of the non-GAAP measures presented.
• GAAP effective tax rate of 22.1% and adjusted effective tax rate of 21.7%, both including a 6
percentage point reduction resulting from U.S. tax reform
• Returned $2.2B of capital to shareholders in the form of share repurchases and dividends
• Performance driven by continued strength in payments volume, cross-border volume and processed
transactions
Fiscal First Quarter 2018 Financial Results4 ©2018 Visa. All rights reserved.
Quarter ended September – Excludes Europe Co-badged Payments Volume*
Payments Volume
US$ in billions, nominal, except percentages
INTL
985
INTL
1,094 INTL
602
INTL
647 INTL
382
INTL
448
U.S.
768
U.S.
836
U.S.
409
U.S.
449
U.S.
359
U.S.
387
1,752
1,930
1,012
1,095
741 835
INTL = International
Total Visa Inc. Credit Debit
YoY Change
(constant) 10% 8% 11%
YoY Change
(nominal)
8% 13%10%
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-badged payments volume is no longer included in
reported volume. For comparative purposes, 2016 data has been adjusted to exclude co-badged payments volume.
Fiscal First Quarter 2018 Financial Results5 ©2018 Visa. All rights reserved.
Quarter ended December
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) 10% 10% 9%
YoY Change
(nominal) 12% 13%12%
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
1,003
INTL
1,150 INTL
601
INTL
676 INTL
403
INTL
474
U.S.
804
U.S.
881
U.S.
430
U.S.
478
U.S.
374
U.S.
402
1,807
2,031
1,031
1,155
777 876
INTL = International
Total Visa Inc. Credit Debit
2016
2017
Fiscal First Quarter 2018 Financial Results6 ©2018 Visa. All rights reserved.
Quarter ended December
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 9% 12%
Debit
62%
Credit
38%
65%
Debit
65%
Debit
35%
Credit
35%
Credit
40,965
44,579
27,329
30,508
Processed TransactionsTotal Transactions
2016
2017
Fiscal First Quarter 2018 Financial Results7 ©2018 Visa. All rights reserved.
Quarter ended September
Total Cards
in millions, except percentages
3,076
1,060
2,016
3,210
1,073
2,137
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 1% 6%4%
2016
2017
Fiscal First Quarter 2018 Financial Results8 ©2018 Visa. All rights reserved.
5,502
(1,041)
4,461
6,188
(1,326)
4,862
Gross
Revenues
Client
Incentives
Net Operating
Revenues
Fiscal 2017
Fiscal 2018
Revenue – Q1 2018
US$ in millions, except percentages
YoY
Change 27% 9%12%
Note: Figures may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
18.9% 21.4%
Client Incentives as a
% of Gross Revenues
2.5ppts
Fiscal First Quarter 2018 Financial Results9 ©2018 Visa. All rights reserved.
Revenue Detail – Q1 2018
US$ in millions, except percentages
1,918 1,892
1,489
203
2,146 2,147
1,666
229
Service Revenues Data Processing
Revenues
International
Transaction Revenues
Other Revenues
Fiscal 2017
Fiscal 2018
YoY
Change 13% 12%12% 13%
Note: Figures may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
Fiscal First Quarter 2018 Financial Results10 ©2018 Visa. All rights reserved.
Operating Margin – Q1 2018
US$ in millions, except percentages
Note: 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.
4,461
1,361
3,100
4,862
1,535
3,327
Net Operating
Revenues
Operating
Expenses
Operating
Income
Fiscal 2017
Fiscal 2018
YoY
Change 13% 7%9% (1) ppt
69% 68%
Operating
Margin
Fiscal First Quarter 2018 Financial Results11 ©2018 Visa. All rights reserved.
Operating Expenses – Q1 2018
US$ in millions, except percentages
Note: Figures may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
571
218
145
80
146
186
15
679
223
160
92
145
236
0
Personnel Marketing Network &
Processing
Professional
Fees
Depreciation &
Amortization
General &
Administrative
Litigation
Provision
Fiscal 2017
Fiscal 2018
YoY
Change 10% 14%19% 27%(1)%3% (100)%
Fiscal First Quarter 2018 Financial Results12 ©2018 Visa. All rights reserved.
Other Financial Results and Highlights
• Cash, cash equivalents and available-for-sale investment securities of
$14.1 billion at the end of the fiscal first quarter
• Adjusted free cash flow of $2.6 billion for the fiscal first quarter
• Capital expenditures of $141 million during the fiscal first quarter
• Redeemed $1.75 billion of senior notes which was scheduled to mature in
December 2017
• The Board of Directors authorized a new $7.5 billion share repurchase
program and increased the Company’s quarterly cash dividend to $0.21
per share
See appendix for reconciliation of adjusted free cash flow to the closest comparable U.S. GAAP financial measure.
Fiscal First Quarter 2018 Financial Results13 ©2018 Visa. All rights reserved.
Financial Outlook for Fiscal Full-Year 2018
Annual net revenue growth
High single digits on a nominal dollar basis, with approximately 0.5 to 1
percentage point of positive foreign currency impact
Client incentives as a
percentage of gross
revenues
21.5% to 22.5% range
Annual operating expense
growth
High end of mid-single digits adjusted for special items in fiscal 2017 (see note
below)
Annual operating margin High 60s
GAAP and adjusted
effective tax rate
Approximately 23%, 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
Mid-50’s on a GAAP nominal dollar basis and high end of mid-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 First 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 December 31, 2017, the Company generated adjusted free cash flow of $2.6 billion, and returned $2.2 billion to investors through
stock buybacks of $1.7 billion, and dividends paid of $458 million. The Company defines adjusted free cash flow as cash provided by
operating activities adjusted to reflect capital investments made in the business. Adjusted free cash flow is a non-GAAP performance
measure and should not be relied upon as a substitute for measures calculated in accordance with U.S. GAAP. The following table
reconciles as-reported net cash provided by operating activities to non-GAAP adjusted free cash flow.
US$ in millions Three Months Ended December 31, 2017
Net cash provided by operating activities
Less: capital expenditures
$2,762
(141)
Adjusted free cash flow $2,621