Visa Inc. Reports Strong Fiscal Second Quarter 2017 Results and Announces New $5.0 Billion Share Repurchase Program

SAN FRANCISCO--()--Visa Inc. (NYSE:V) today announced financial results for the Company’s fiscal second quarter 2017, ended March 31, 2017.

“In the face of geo-political uncertainty, Visa continues to execute well against our operating plan and strategic priorities, delivering sustained growth across nearly every part of our business”

Fiscal Second Quarter 2017 Key Highlights:

  • GAAP net income of $430 million or $0.18 per share including special items related to the legal entity reorganization of Visa Europe
  • Adjusted net income of $2.1 billion or $0.86 per share excluding special items related to the legal entity reorganization of Visa Europe
  • Net operating revenue of $4.5 billion, an increase of 23%, driven by inclusion of Europe and continued growth in payments volume, cross-border volume and processed transactions
  • Payments volume growth, on a constant dollar basis, was 37% over the prior year at $1.7 trillion
  • Cross-border volume growth, on a constant dollar basis, was 132% or 11% inclusive of Europe in prior year results
  • Total Visa processed transactions were 26.3 billion, a 42% increase over the prior year, or 12% growth inclusive of Europe in prior year results
  • Newly-formed Visa Foundation funded with contribution of $192 million
  • Returned approximately $2.1 billion of capital to shareholders in the form of share repurchases and dividends
  • Board authorized a new $5.0 billion class A common stock share repurchase program

“In the face of geo-political uncertainty, Visa continues to execute well against our operating plan and strategic priorities, delivering sustained growth across nearly every part of our business,” said Alfred F. Kelly, Jr., Chief Executive Officer of Visa Inc. "Robust growth in payments volume, cross-border volume and processed transactions drove better than expected results. Looking ahead, we are continuing our efforts across the globe to electronify commerce and digitize economies to the benefit of consumers and societies alike.”

Fiscal Second Quarter 2017 Special Items Related to the Visa Europe Reorganization:

During the fiscal second quarter of 2017, the Company completed a legal entity reorganization of Visa Europe and certain other Visa subsidiaries to align the Company's global corporate structure to the geographic jurisdictions in which it conducts business operations. Associated with this reorganization, the Company recorded the following special items:

  • $1.5 billion non-recurring, non-cash income tax provision related to the elimination of deferred tax balances originally recorded upon the acquisition of Visa Europe in June 2016; and
  • $192 million non-recurring, non-cash general and administrative expense associated with the charitable donation of Visa Inc. shares that were acquired as part of the Visa Europe acquisition and held as treasury stock. The newly-formed Visa Foundation received the donation of Visa Inc. shares and the Company recognized a $71 million cash income tax benefit.

All references to earnings per share assume fully-diluted class A share count, inclusive of series B and C convertible participating preferred stock, unless otherwise noted. The Company’s adjusted quarterly operating expenses, effective income tax rate, net income and earnings per share of class A common stock are non-GAAP financial measures that are reconciled to their most directly comparable GAAP measure in the accompanying financial tables.

Fiscal Second Quarter 2017 Financial Highlights:

GAAP net income for the quarter, inclusive of special items related to the legal entity reorganization of Visa Europe, was $430 million or $0.18 per share, both decreasing 75% over the prior year's results, primarily related to the special items from the Visa Europe legal entity reorganization noted above.

Excluding special items, adjusted net income for the quarter was $2.1 billion and adjusted earnings per share was $0.86, both increasing 27% over the prior year's adjusted results. Exchange rate shifts versus the prior year negatively impacted earnings per share growth by approximately 4 percentage points. The prior year's adjusted results exclude the impact of a non-recurring, non-operating gain related to currency forward contracts.

Net operating revenue in the fiscal second quarter of 2017 was $4.5 billion, an increase of 23%, driven by the inclusion of Europe and continued growth in payments volume, cross-border volume and processed transactions. Exchange rate shifts versus the prior year negatively impacted reported net operating revenue growth by approximately 2.5 percentage points.

Payments volume growth, on a constant dollar basis, for the three months ended December 31, 2016, on which fiscal second quarter service revenue is recognized, was 39% over the prior year at $1.8 trillion. Effective with the three months ended December 31, 2016, Europe co-badge volume is no longer included in reported volume.

Payments volume growth, on a constant dollar basis, for the three months ended March 31, 2017, was 37% over the prior year at $1.7 trillion.

Cross-border volume growth, on a constant dollar basis, was 132% for the three months ended March 31, 2017. Cross-border volume growth, on a constant dollar basis and inclusive of Europe in prior year results, was 11%.

Total processed transactions, which represent transactions processed by Visa, for the three months ended March 31, 2017, were 26.3 billion, a 42% increase over the prior year. Total processed transactions growth was 12%, inclusive of Europe in prior year results.

Fiscal second quarter 2017 service revenues were $2.0 billion, an increase of 17% over the prior year, and are recognized based on payments volume in the prior quarter. All other revenue categories are recognized based on current quarter activity. Data processing revenues rose 25% over the prior year to $1.8 billion. International transaction revenues grew 41% over the prior year to $1.5 billion. Other revenues were $203 million, an increase of 3% over the prior year. Client incentives, which are a contra revenue item, were $1.0 billion and represent 18.7% of gross revenues.

GAAP operating expenses were $1.7 billion for the fiscal second quarter 2017, a 40% increase over the prior year's results, primarily driven by increases in general and administrative expense related to the charitable donation to the newly-formed Visa Foundation. Adjusted operating expenses, which excludes the charitable donation, were $1.5 billion, an increase of 24% over the prior year's results, primarily from the inclusion of Visa Europe's operating expenses following the acquisition.

GAAP effective income tax rate was 84.1% for the quarter ended March 31, 2017, including the $1.5 billion non-recurring, non-cash income tax provision related to the elimination of deferred tax balances originally recorded upon the acquisition of Visa Europe and the $71 million tax benefit related to the charitable donation. Adjusted effective income tax rate was 28.6%, excluding the aforementioned items.

Cash, cash equivalents, and available-for-sale investment securities were $10.7 billion at March 31, 2017.

The weighted-average number of diluted shares of class A common stock outstanding was 2.41 billion for the quarter ended March 31, 2017.

Notable Events:

During the three months ended March 31, 2017, the Company repurchased 19.1 million shares of class A common stock, at an average price of $88.51 per share, using $1.7 billion of cash on hand. In the six months ended March 31, 2017, the Company repurchased a total of 41.4 million shares of class A common stock, at an average price of $83.81 per share, using $3.5 billion of cash on hand. The board of directors has authorized a new $5.0 billion class A common stock share repurchase program and the Company currently has $7.2 billion of funds available for share repurchase.

On April 18, 2017, the board of directors declared a quarterly cash dividend of $0.165 per share of class A common stock (determined in the case of class B and C common stock and series B and C convertible participating preferred stock on an as-converted basis) payable on June 6, 2017, to all holders of record of the Company’s common and preferred stock as of May 19, 2017.

Financial Outlook for Fiscal Full-Year 2017:

Visa Inc. updates its financial outlook for the following GAAP metrics for fiscal full-year 2017:

  • Annual net revenue growth: High end of 16% to 18% range on a nominal dollar basis, including 2.0 to 2.5 ppts of negative foreign currency impact;
  • Client incentives as a percent of gross revenues: Low end of 20.5% to 21.5% range;
  • Annual operating margin: Mid 60s;
  • Effective tax rate: Mid 40s on a GAAP basis and approximately 30% on an adjusted, non-GAAP basis; and
  • Annual diluted class A common stock earnings per share growth: High single-digits on a GAAP nominal dollar basis and high end of 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. 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.

Fiscal Second Quarter 2017 Earnings Results Conference Call Details:

Visa’s executive management team will host a live audio webcast beginning at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) today to discuss the financial results and business highlights. All interested parties are invited to listen to the live webcast at http://investor.visa.com. A replay of the webcast will be available on the Visa Investor Relations website for 30 days. Investor information, including supplemental financial information, is available on Visa Inc.’s Investor Relations website at http://investor.visa.com.

About Visa Inc.

Visa Inc. (NYSE: V) is a global payments technology company that connects consumers, businesses, financial institutions, and governments in more than 200 countries and territories to fast, secure and reliable electronic payments. We operate one of the world’s most advanced processing networks - VisaNet - that is capable of handling more than 65,000 transaction messages a second, with fraud protection for consumers and assured payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa’s innovations, however, enable its financial institution customers to offer consumers more choices: pay now with debit, pay ahead with prepaid or pay later with credit products. For more information, visit visa.com/aboutvisa, visacorporate.tumblr.com and @VisaNews.

Forward-Looking Statements:

This press release 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.

   
VISA INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

March 31,
2017

September 30,
2016

(in millions, except par value data)
Assets
Cash and cash equivalents $ 6,427 $ 5,619
Restricted cash—U.S. litigation escrow 1,029 1,027
Investment securities:
Trading 78 71
Available-for-sale 1,417 3,248
Settlement receivable 3,350 1,467
Accounts receivable 1,081 1,041
Customer collateral 1,043 1,001
Current portion of client incentives

292

284
Prepaid expenses and other current assets 788   555  
Total current assets 15,505 14,313
Investment securities, available-for-sale 2,882 3,931
Client incentives 486 448
Property, equipment and technology, net 2,133 2,150
Other assets 980 893
Intangible assets, net 26,416 27,234
Goodwill 14,825   15,066  
Total assets $ 63,227   $ 64,035  
Liabilities
Accounts payable $ 120 $ 203
Settlement payable 2,879 2,084
Customer collateral 1,043 1,001
Accrued compensation and benefits 500 673
Client incentives 1,753 1,976
Accrued liabilities 1,167 1,128
Current maturities of long-term debt 1,748
Accrued litigation 996   981  
Total current liabilities 10,206 8,046
Long-term debt 14,140 15,882
Deferred tax liabilities 5,731 4,808
Deferred purchase consideration 1,180 1,225
Other liabilities 1,187   1,162  
Total liabilities 32,444   31,123  
Equity
Preferred stock, $0.0001 par value, 25 shares authorized and 5 issued and outstanding as follows:
Series A convertible participating preferred stock, none issued

Series B convertible participating preferred stock, 2 shares issued and outstanding at March 31,
2017 and September 30, 2016

2,397 2,516

Series C convertible participating preferred stock, 3 shares issued and outstanding at March 31,
2017 and September 30, 2016

3,200 3,201

Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 1,847 and 1,871 shares
issued and outstanding at March 31, 2017 and September 30, 2016, respectively

Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding
at March 31, 2017 and September 30, 2016

Class C common stock, $0.0001 par value, 1,097 shares authorized, 14 and 17 shares issued and
outstanding at March 31, 2017 and September 30, 2016, respectively

Treasury stock (170 )
Right to recover for covered losses (77 ) (34 )
Additional paid-in capital 17,103 17,395
Accumulated income 9,140 10,462
Accumulated other comprehensive loss, net:
Investment securities, available-for-sale 45 36
Defined benefit pension and other postretirement plans (216 ) (225 )
Derivative instruments classified as cash flow hedges (6 ) (50 )
Foreign currency translation adjustments (803 ) (219 )
Total accumulated other comprehensive loss, net (980 ) (458 )
Total equity 30,783   32,912  
Total liabilities and equity $ 63,227   $ 64,035  
         
VISA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

Three Months Ended
March 31,

Six Months Ended
March 31,

2017 2016 2017 2016
(in millions, except per share data)
Operating Revenues
Service revenues $ 1,993 $ 1,699 $ 3,911 $ 3,344
Data processing revenues 1,843 1,473 3,735 2,952
International transaction revenues 1,469 1,045 2,958 2,076
Other revenues 203 198 406 396
Client incentives (1,031 ) (789 ) (2,072 ) (1,577 )
Net operating revenues 4,477   3,626   8,938   7,191  
 
Operating Expenses
Personnel 704 528 1,275 1,027
Marketing 193 186 411 380
Network and processing 150 126 295 254
Professional fees 83 66 163 138
Depreciation and amortization 131 121 277 241
General and administrative 406 164 592 320
Litigation provision 2   1   17   1  
Total operating expenses 1,669   1,192   3,030   2,361  
Operating income 2,808   2,434   5,908   4,830  
 
Non-operating (Expense) Income
Interest expense (135 ) (132 ) (275 ) (161 )
Other 29   139   48   411  
Total non-operating (expense) income (106 ) 7   (227 ) 250  
Income before income taxes 2,702 2,441 5,681 5,080
Income tax provision 2,272   734   3,181   1,432  
Net income $ 430   $ 1,707   $ 2,500   $ 3,648  
 
Basic earnings per share
Class A common stock $ 0.18   $ 0.71   $ 1.04   $ 1.51  
Class B common stock $ 0.30   $ 1.17   $ 1.71   $ 2.49  
Class C common stock $ 0.72   $ 2.85   $ 4.15   $ 6.05  
 

Basic weighted-average shares
outstanding

Class A common stock 1,854   1,909   1,857   1,923  
Class B common stock 245   245   245   245  
Class C common stock 15   19   16   19  
 
Diluted earnings per share
Class A common stock $ 0.18   $ 0.71   $ 1.04   $ 1.51  
Class B common stock $ 0.29   $ 1.17   $ 1.71   $ 2.49  
Class C common stock $ 0.72   $ 2.84   $ 4.14   $ 6.04  
 

Diluted weighted-average shares
outstanding

Class A common stock 2,406   2,401   2,413   2,416  
Class B common stock 245   245   245   245  
Class C common stock 15   19   16   19  
     
VISA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

Six Months Ended
March 31,

2017 2016
(in millions)
Operating Activities
Net income $ 2,500 $ 3,648
Adjustments to reconcile net income to net cash provided by operating activities:
Client incentives 2,072 1,577
Fair value adjustment for the Visa Europe put option (255 )
Share-based compensation 116 97
Excess tax benefit for share-based compensation (43 )
Depreciation and amortization of property, equipment, technology and intangible assets 277 241
Deferred income taxes 1,700 (29 )
Right to recover for covered losses recorded in equity (163 )
Charitable contribution of Visa Inc. shares 192
Other 23 17
Change in operating assets and liabilities:
Settlement receivable (1,946 ) (6 )
Accounts receivable (40 ) (97 )
Client incentives (2,306 ) (1,912 )
Other assets (301 ) (397 )
Accounts payable (83 ) (34 )
Settlement payable 883 (57 )
Accrued and other liabilities (35 ) 81
Accrued litigation 15   (12 )
Net cash provided by operating activities 2,904   2,819  
Investing Activities
Purchases of property, equipment, technology and intangible assets (317 ) (250 )
Investment securities, available-for-sale:
Purchases (1,083 ) (17,437 )
Proceeds from maturities and sales 3,972 15,860
Acquisition of business, net of cash received (302 ) (14 )
Purchases of / contributions to other investments (2 ) (9 )
Proceeds / distributions from other investments   4  
Net cash provided by (used in) investing activities 2,268   (1,846 )
Financing Activities
Repurchase of class A common stock (3,469 ) (3,765 )
Dividends paid (795 ) (676 )
Proceeds from issuance of senior notes 15,971
Debt issuance costs (96 )
Payments from litigation escrow account—U.S. retrospective responsibility plan 11
Cash proceeds from issuance of common stock under employee equity plans 87 49
Restricted stock and performance-based shares settled in cash for taxes (66 ) (85 )
Excess tax benefit for share-based compensation   43  
Net cash (used in) provided by financing activities (4,243 ) 11,452  
Effect of exchange rate changes on cash and cash equivalents (121 )  
Increase in cash and cash equivalents 808 12,425
Cash and cash equivalents at beginning of year 5,619   3,518  
Cash and cash equivalents at end of period $ 6,427   $ 15,943  
Supplemental Disclosure
Income taxes paid, net of refunds $ 1,611 $ 1,501
Interest payments on debt $ 244 $
Net unrealized gain on currency forward contracts $ $ 116
Accruals related to purchases of property, equipment, technology and intangible assets $ 37 $ 38
           
VISA INC.
FISCAL 2017 AND 2016 QUARTERLY RESULTS OF OPERATIONS
(UNAUDITED)
 
Fiscal 2017 Quarter Ended Fiscal 2016 Quarter Ended

March 31,
2017

December 31,
2016

September 30,
2016

June 30,
2016(1)

March 31,
2016

(in millions)
Operating Revenues
Service revenues $ 1,993 $ 1,918 $ 1,768 $ 1,635 $ 1,699
Data processing revenues 1,843 1,892 1,779 1,541 1,473
International transaction revenues 1,469 1,489 1,489 1,084 1,045
Other revenues 203 203 218 209 198
Client incentives (1,031 ) (1,041 ) (993 ) (839 ) (789 )
Net operating revenues 4,477   4,461   4,261   3,630   3,626  
 
Operating Expenses
Personnel 704 571 690 509 528
Marketing 193 218 300 189 186
Network and processing 150 145 161 123 126
Professional fees 83 80 113 138 66
Depreciation and amortization 131 146 141 120 121
General and administrative 406 186 230 246 164
Litigation provision 2 15 1 1

Visa Europe Framework Agreement loss

      1,877    
Total operating expenses 1,669   1,361   1,636   3,202   1,192  
Operating income 2,808   3,100   2,625   428   2,434  
 
Non-operating (Expense) Income
Interest expense (135 ) (140 ) (135 ) (131 ) (132 )
Other 29   19   20   125   139  
Total non-operating (expense) income (106 ) (121 ) (115 ) (6 ) 7  
Income before income taxes 2,702 2,979 2,510 422 2,441
Income tax provision 2,272   909   579   10   734  
Net income $ 430   $ 2,070   $ 1,931   $ 412   $ 1,707  

(1)

 

We did not include Visa Europe's financial results in our unaudited consolidated statements of operations from the acquisition date, June 21, 2016, through June 30, 2016 as the impact was immaterial.

 

VISA INC.
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
FISCAL SECOND QUARTER 2017 and 2016
(UNAUDITED)

Adjusted financial results. Our financial results for the three and six months ended March 31, 2017 and 2016 reflect the impact of certain significant items that we do not believe are indicative of our ongoing operating performance in these or future periods as they are either non-recurring or have no cash impact. As such, we believe the presentation of adjusted financial results excluding the following items provides a clearer understanding of our operating performance for the periods presented.

  • Elimination of deferred tax balances. During the second quarter of fiscal 2017, in connection with our legal entity reorganization, we eliminated deferred tax balances originally recognized upon the acquisition of Visa Europe, resulting in the recognition of a non-recurring, non-cash income tax provision of $1.5 billion.
  • Charitable contribution. During the second quarter of fiscal 2017, associated with our legal entity reorganization, we recognized a non-recurring, non-cash general and administrative expense of $192 million, before tax, related to the charitable donation of Visa Inc. shares that were acquired as part of the Visa Europe acquisition and held as treasury stock. Net of the related cash tax benefit of $71 million, determined by applying applicable tax rates, adjusted net income increased by $121 million.
  • Revaluation of Visa Europe put option. During the first quarter of fiscal 2016, we recorded a decrease of $255 million in the fair value of the Visa Europe put option, resulting in the recognition of non-cash income in other non-operating income. This amount is not subject to income tax and therefore has no impact on our reported income tax provision.
  • Net unrealized gains on currency forward contracts. During the second quarter of fiscal 2016, we entered into currency forward contracts to mitigate a portion of our foreign currency exchange rate risk associated with the upfront cash consideration paid in the Visa Europe acquisition. As a result, we recorded non-recurring, net unrealized gains of $116 million, before tax, in non-operating income. Net of related tax expense of $35 million, determined by applying applicable federal and state tax rates, the impact to net income was $81 million.

Adjusted financial results are non-GAAP financial measures and should not be relied upon as substitutes for measures calculated in accordance with U.S. GAAP. The following tables reconcile our as-reported financial measures calculated in accordance with U.S. GAAP, to our respective non-GAAP adjusted financial measures for the three and six months ended March 31, 2017 and 2016.

 
Three Months Ended March 31, 2017

(in millions, except
percentages and per share
data)

Operating
Expenses

 

Operating
Margin
(1),(2)

 

Non-
operating
Income
(Expense)

 

Income
Before
Income
Taxes

 

Income
Tax
Provision

 

Effective
Income
Tax
Rate(1)

 

Net
Income

 

Diluted
Earnings
Per
Share(1)

As reported $ 1,669 63 % $ (106 ) $ 2,702 $ 2,272 84.1 % $ 430 $ 0.18

Elimination of deferred tax
balances

% (1,515 ) 1,515 0.63
Charitable contribution   (192 ) 4 %       192     71     121     0.05  
As adjusted $ 1,477 67 % $ (106 ) $ 2,894 $ 828 28.6 % $ 2,066 $ 0.86
 
Six Months Ended March 31, 2017

(in millions, except
percentages and per share
data)

Operating
Expenses

Operating
Margin
(1),(2)

Non-
operating
Income
(Expense)

Income
Before
Income
Taxes

Income
Tax
Provision

Effective
Income
Tax
Rate(1)

Net
Income

Diluted
Earnings
Per
Share(1)

As reported $ 3,030 66 % $ (227 ) $ 5,681 $ 3,181 56.0 % $ 2,500 $ 1.04

Elimination of deferred tax
balances

% (1,515 ) 1,515 0.63
Charitable contribution   (192 ) 2 %       192     71     121     0.05  
As adjusted $ 2,838 68 % $ (227 ) $ 5,873 $ 1,737 29.6 % $ 4,136 $ 1.71
 
Three Months Ended March 31, 2016

(in millions, except
percentages and per share
data)

Operating
Expenses

Operating
Margin
(1),(2)

Non-
operating
Income
(Expense)

Income
Before
Income
Taxes

Income
Tax
Provision

Effective
Income
Tax
Rate(1)

Net
Income

Diluted
Earnings
Per
Share(1)

As reported $ 1,192 67 % $ 7 $ 2,441 $ 734

30.1

%

$

1,707

$ 0.71

Net unrealized gains on currency
forward contracts

    %  

(116

)

 

 

(116

)

 

(35

)

 

 

(81

)

   

(0.03

)

As adjusted $ 1,192 67 %

$

(109

)

$

2,325

$ 699

30.1

%

$

1,626

$ 0.68
 
Six Months Ended March 31, 2016

(in millions, except
percentages and per share
data)

Operating
Expenses

Operating
Margin
(1),(2)

Non-
operating
Income
(Expense)

Income
Before
Income
Taxes

Income
Tax
Provision

Effective
Income
Tax
Rate(1)

Net
Income

Diluted
Earnings
Per
Share(1)

As reported $ 2,361 67 % $ 250 $ 5,080 $ 1,432 28.2 % $ 3,648 $ 1.51

Net unrealized gains on currency
forward contracts

% (116 ) (116 ) (35 ) (81 ) (0.03 )

Revaluation of Visa Europe put
option

    %   (255 )   (255 )       (255 )   (0.11 )
As adjusted $ 2,361 67 % $ (121 ) $ 4,709 $ 1,397 29.7 % $ 3,312 $ 1.37

(1)

  Figures in the table may not recalculate exactly due to rounding. Operating margin, effective income tax rate, diluted earnings per share, and their respective totals are calculated based on unrounded numbers.

(2)

Operating margin is calculated as operating income divided by net operating revenues.
 

VISA INC.
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
FISCAL FULL-YEAR 2016
(UNAUDITED)

Our fiscal full-year 2017 annual diluted class A common stock earnings per share growth outlook is based on adjusted non-GAAP fiscal full-year 2016 results, which are reconciled to their closest comparable U.S. GAAP financial measure below.

Our financial results during the twelve months ended September 30, 2016 reflect the impact of certain significant items that we do not believe are indicative of our ongoing operating performance, as they are either non-recurring or have no cash impact. As such, we believe the presentation of adjusted financial results excluding the following items provides a clearer understanding of our operating performance for the periods presented.

  • Severance cost. In the fiscal fourth quarter, we recorded a $110 million charge for severance costs related to personnel reductions including planned reductions at Visa Europe. Although we routinely record severance expenses, these charges are larger than any past quarterly accrual due to the acquisition and integration of Visa Europe. Net of related tax benefit of $38 million, determined by applying applicable tax rates, the adjustment to net income was an increase of $72 million.
  • Remeasurement of deferred tax liability. In September 2016, we recorded a non-cash, non-recurring $88 million gain upon the remeasurement of a deferred tax liability, recorded upon the acquisition of Visa Europe, to reflect a tax rate change in the United Kingdom.
  • Acquisition-related costs. During the twelve months ended September 30, 2016, we incurred $152 million of non-recurring acquisition costs in operating expense as a result of the Visa Europe transaction. This amount is comprised of $60 million of transaction expenses recorded in professional fees, and $92 million of U.K. stamp duty recorded in general and administrative expenses. Net of related tax benefit of $56 million, determined by applying applicable federal and state tax rates, the adjustment to net income was an increase of $96 million.
  • Visa Europe Framework Agreement loss. Upon consummation of the transaction, on June 21, 2016, we recorded a non-recurring loss of $1.9 billion, before tax, in operating expense resulting from the effective settlement of the Framework Agreement between Visa and Visa Europe. Net of related tax benefit of $693 million, determined by applying applicable federal and state tax rates, the adjustment to net income was an increase of $1.2 billion.
  • Net gains on currency forward contracts. During the twelve months ended September 30, 2016, we entered into currency forward contracts to mitigate a portion of the foreign currency exchange rate risk associated with the upfront cash consideration paid in the Visa Europe acquisition. As a result, we recorded non-recurring, net gains of $74 million, before tax, in other non-operating income. Net of related tax expense of $27 million, determined by applying applicable federal and state tax rates, the adjustment to net income was a decrease of $47 million.
  • Foreign exchange gain on euro deposits. During the twelve months ended September 30, 2016, we recorded a non-recurring foreign exchange gain of $145 million, before tax, in other non-operating income as a result of holding euro-denominated bank balances for a short period in advance of the closing date of the Visa Europe transaction. Net of related tax expense of $54 million, determined by applying applicable federal and state tax rates, the impact to net income was a decrease of $91 million.
  • Revaluation of Visa Europe put option. During the first quarter of fiscal 2016, we recorded a decrease of $255 million in the fair value of the Visa Europe put option, resulting in the recognition of non-cash income in other non-operating income. This amount is not subject to income tax and therefore has no impact on the reported income tax provision.

Adjusted operating expenses, operating margin, non-operating income (expense), income before income taxes, income taxes, effective income tax rate, net income and diluted earnings per share are non-GAAP financial measures and should not be relied upon as substitutes for measures calculated in accordance with U.S. GAAP. The following table reconciles our as-reported financial measures calculated in accordance with U.S. GAAP, to the respective non-GAAP adjusted financial measures for the twelve months ended September 30, 2016.

   
Twelve Months Ended September 30, 2016 (1)

(in millions, except
percentages and per share
data)

Operating
Expenses

     

Operating Margin
(2),(3)

     

Non-
operating
Income
(Expense)

     

Income
Before
Income
Taxes

     

Income
Taxes

     

Effective
Income
Tax Rate
(2)

     

Net
Income

     

Diluted
Earnings
Per
Share(2)

As reported $ 7,199 52 % $ 129 $ 8,012 $ 2,021 25.2 % $ 5,991 $ 2.48
Severance cost (110 ) 1 % 110 38 72 0.03

Remeasurement of deferred
tax liability

%

 

88 (88 ) (0.04 )

Acquisition-related costs

(152 ) 1 % 152 56 96 0.04

Visa Europe Framework
Agreement loss

(1,877 ) 12 % 1,877 693 1,184 0.49

Net gains on currency forward
contracts

% (74 ) (74 ) (27 ) (47 ) (0.02 )

Foreign exchange gain on euro
deposits

% (145 ) (145 ) (54 ) (91 ) (0.04 )

Revaluation of Visa Europe put
option

  % (255 ) (255 )     (255 ) (0.11 )
As adjusted $ 5,060 66 % $ (345 ) $ 9,677 $ 2,815 29.1 % $ 6,862 $ 2.84

Diluted weighted-average
shares outstanding, as
reported

2,414

(1)

  We did not include Visa Europe's financial results in our unaudited consolidated statements of operations from the acquisition date, June 21, 2016, through June 30, 2016 as the impact was immaterial. Our unaudited consolidated statement of operations for the year ended September 30, 2016 includes Visa Europe's financial results for the three months ended September 30, 2016.

(2)

Figures in the table may not recalculate exactly due to rounding. Operating margin, effective income tax rate, diluted earnings per share, and their respective totals are calculated based on unrounded numbers.

(3)

Operating margin is calculated as operating income divided by net operating revenues.
 

Operational Performance Data

The tables below provide information regarding the available operational results for the 3 months ended March 31, 2017, as well as the prior four quarterly reporting periods and the 12 months ended March 31, 2017 and 2016, for cards carrying the Visa, Visa Electron, V PAY and Interlink brands. Sections 1-4 below reflect the acquisition of Visa Europe, with Europe included in Visa Inc. results effective the 3 months ended September 30, 2016.

1. Branded Volume and Transactions

The tables present regional total volume, payments volume, and cash volume, and the number of payments transactions, cash transactions, accounts and cards for cards carrying the Visa, Visa Electron, V PAY and Interlink brands. Card counts include PLUS proprietary cards. Nominal and constant dollar growth rates over prior years are provided for volume-based data.

 
For the 3 Months Ended March 31, 2017

Total
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Payments
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Payments
Transactions
(millions)

 

Cash
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Cash
Transactions
(millions)

All Visa Credit & Debit
Asia Pacific $ 522 2.3 % 3.4 % $ 398 5.8 % 7.1 % 5,512 $ 125 (7.5 %) (7.0 %) 837
Canada 57 12.7 % 8.3 % 53 13.4 % 9.0 % 720 5 5.7 % 1.6 % 10
CEMEA 236 15.4 % 7.1 % 73 28.6 % 16.9 % 2,894 163 10.3 % 3.2 % 1,200
LAC 239 17.6 % 11.0 % 96 21.0 % 13.1 % 3,016 144 15.4 % 9.7 % 1,141
US 908 10.3 % 10.3 % 775 11.7 % 11.7 % 14,553 133 2.9 % 2.9 % 930

Europe

458   335   7,211   122   1,004

Visa Inc.

2,421 35.0 % 33.2 % 1,730 38.1 % 37.2 % 33,906 691 27.9 % 24.2 % 5,122
 
Visa Credit Programs
US $ 418 19.9 % 19.9 % $ 404 20.7 % 20.7 % 4,856 $ 14 0.2 % 0.2 % 16

International

618   30.2 % 29.2 % 571   28.2 % 27.6 % 8,273   48   60.5 % 51.5 % 226
Visa Inc. 1,037 25.9 % 25.3 % 974 25.0 % 24.7 % 13,129 62 40.9 % 35.4 % 242
 
Visa Debit Programs
US $ 489 3.2 % 3.2 % $ 371 3.2 % 3.2 % 9,697 $ 118 3.3 % 3.3 % 914

International

895   80.7 % 73.5 % 384   239.0 % 220.9 % 11,079   511   33.7 % 28.9 % 3,965
Visa Inc. 1,384 42.8 % 39.8 % 755 59.7 % 57.6 % 20,776 629 26.7 % 23.2 % 4,880
 
For the 3 Months Ended December 31, 2016

Total
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Payments
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Payments
Transactions
(millions)

 

Cash
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Cash
Transactions
(millions)

 

Accounts
(millions)

 

Cards
(millions)

All Visa Credit & Debit
Asia Pacific $ 538 2.8 % 3.7 % $ 419 8.2 % 9.4 % 5,662 $ 119 (12.6 %) (12.5 %) 920 802 908
Canada 63 5.5 % 5.1 % 58 5.7 % 5.3 % 778 5 3.5 % 3.1 % 10 50 55
CEMEA 246 7.8 % 8.7 % 72 19.8 % 19.9 % 2,823 174 3.5 % 4.7 % 1,302 334 322
LAC 250 5.6 % 8.7 % 98 9.5 % 11.9 % 3,154 152 3.2 % 6.7 % 1,215 418 454
US 937 11.3 % 11.3 % 804 12.5 % 12.5 % 15,321 134 4.5 % 4.5 % 934 718 862

Europe

490   352   7,622   138   1,112   485   542
Visa Inc. 2,524 33.6 % 34.5 % 1,802 38.1 % 38.7 % 35,360 722 23.5 % 25.0 % 5,493 2,808 3,144
 
Visa Credit Programs
US $ 444 19.5 % 19.5 % $ 430 20.3 % 20.3 % 5,349 $ 14 (0.1 %) (0.1 %) 16 282 335

International

648   28.5 % 29.9 % 596   26.8 % 28.2 % 8,673   52   51.9 % 52.6 % 259   653   728
Visa Inc. 1,093 24.7 % 25.4 % 1,026 24.0 % 24.8 % 14,022 66 36.5 % 36.9 % 276 935 1,063
 
Visa Debit Programs
US $ 493 4.8 % 4.8 % $ 374 4.8 % 4.8 % 9,972 $ 119 5.0 % 5.0 % 917 436 527

International

939   72.7 % 75.2 % 402   232.3 % 235.0 % 11,366   536   27.0 % 29.0 % 4,300   1,436   1,554
Visa Inc. 1,432 41.2 % 42.3 % 776 62.4 % 62.8 % 21,338 656 22.3 % 23.9 % 5,217 1,872 2,081
 
For the 3 Months Ended September 30, 2016

Total
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Payments
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Payments
Transactions
(millions)

 

Cash
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Cash
Transactions
(millions)

 

Accounts
(millions)

 

Cards
(millions)

All Visa Credit & Debit
Asia Pacific $ 536 5.1 % 3.9 % $ 406 9.4 % 7.8 % 5,244 $ 129 (6.4 %) (6.6 %) 997 786 891
Canada 62 5.9 % 5.8 % 57 5.9 % 5.7 % 763 5 6.3 % 6.2 % 12 48 56
CEMEA 237 2.4 % 7.6 % 68 11.9 % 16.6 % 2,583 169 (1.0 %) 4.3 % 1,242 329 318
LAC 236 3.8 % 10.5 % 91 7.1 % 13.6 % 2,993 145 1.9 % 8.6 % 1,165 408 444
US 903 9.9 % 9.9 % 768 10.8 % 10.8 % 14,925 135 5.1 % 5.1 % 958 697 835

Europe

646   468   9,581   177   1,421   479   542
Visa Inc. 2,620 41.7 % 43.2 % 1,859 47.0 % 47.2 % 36,090 761 30.1 % 34.1 % 5,793 2,747 3,086
 
Visa Credit Programs
US $ 424 18.3 % 18.3 % $ 409 18.8 % 18.8 % 5,124 $ 15 6.1 % 6.1 % 18 276 329

International

725   47.6 % 47.4 % 656   44.0 % 43.6 % 9,556   69   94.2 % 98.3 % 394   655   731
Visa Inc. 1,149 35.2 % 35.1 % 1,066 33.1 % 32.9 % 14,680 84 68.8 % 71.3 % 413 931 1,060
 
Visa Debit Programs
US $ 479 3.4 % 3.4 % $ 359 2.9 % 2.9 % 9,800 $ 120 4.9 % 4.9 % 940 422 507

International

992   85.0 % 92.0 % 435   276.2 % 286.9 % 11,609   557   32.4 % 37.8 % 4,441   1,395   1,519
Visa Inc. 1,470 47.2 % 50.1 % 793 70.9 % 72.1 % 21,410 677 26.6 % 30.6 % 5,380 1,817 2,026
 
For the 3 Months Ended June 30, 2016

Total
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Payments
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Payments
Transactions
(millions)

 

Cash
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Cash
Transactions
(millions)

 

Accounts
(millions)

 

Cards
(millions)

All Visa Credit & Debit
Asia Pacific $ 531 4.3 % 7.3 % $ 393 7.9 % 10.3 % 5,055 $ 138 (5.0 %) (0.4 %) 1,014 766 870
Canada 62 0.7 % 6.7 % 57 0.5 % 6.4 % 741 5 3.6 % 9.7 % 11 47 54
CEMEA 233 (2.0 %) 11.4 % 64 4.8 % 18.3 % 2,415 169 (4.3 %) 8.9 % 1,255 331 318
LAC 224 (5.8 %) 10.8 % 86 (3.3 %) 14.4 % 2,859 138 (7.2 %) 8.7 % 1,127 409 445

US

883   9.1 % 9.1 % 749   9.7 % 9.7 % 14,680   134   5.9 % 5.9 % 973   677   818
Visa Inc. 1,933 4.2 % 9.0 % 1,349 7.6 % 10.4 % 25,751 584 (3.0 %) 5.8 % 4,380 2,230 2,505
 
Visa Credit Programs
US $ 390 10.9 % 10.9 % $ 376 10.9 % 10.9 % 4,583 $ 15 10.9 % 10.9 % 17 271 322

International

513   4.5 % 9.8 % 476   5.0 % 9.9 % 6,623   37   (2.0 %) 8.7 % 159   509   569
Visa Inc. 903 7.2 % 10.3 % 852 7.5 % 10.3 % 11,206 51 1.4 % 9.4 % 176 780 891
 
Visa Debit Programs
US $ 493 7.7 % 7.7 % $ 374 8.5 % 8.5 % 10,097 $ 119 5.3 % 5.3 % 956 406 495

International

537   (3.3 %) 8.0 % 123   5.4 % 17.1 % 4,448   414   (5.6 %) 5.6 % 3,249   1,044   1,118
Visa Inc. 1,030 1.7 % 7.9 % 497 7.7 % 10.5 % 14,545 533 (3.4 %) 5.5 % 4,204 1,450 1,614
 
For the 3 Months Ended March 31, 2016

Total
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Payments
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Payments
Transactions
(millions)

 

Cash
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Cash
Transactions
(millions)

 

Accounts
(millions)

 

Cards
(millions)

All Visa Credit & Debit
Asia Pacific $ 511 3.2 % 8.8 % $ 376 9.6 % 14.1 % 4,745 $ 135 (11.1 %) (3.6 %) 1,017 753 856
Canada 51 (5.1 %) 5.0 % 46 (5.3 %) 4.7 % 659 5 (2.4 %) 8.0 % 11 47 54
CEMEA 205 (3.4 %) 8.4 % 57 4.9 % 17.9 % 2,185 148 (6.2 %) 5.1 % 1,161 330 321
LAC 204 (16.2 %) 7.7 % 79 (15.2 %) 13.1 % 2,799 124 (16.8 %) 4.5 % 1,076 406 439

US

823   10.0 % 10.0 % 694   10.5 % 10.5 % 13,619   129   7.3 % 7.3 % 932   662   794
Visa Inc. 1,793 2.4 % 9.0 % 1,252 7.3 % 11.8 % 24,007 541 (7.4 %) 3.2 % 4,198 2,197 2,465
 
Visa Credit Programs
US $ 349 10.5 % 10.5 % $ 334 10.6 % 10.6 % 4,067 $ 14 8.8 % 8.8 % 16 255 301

International

475   2.5 % 11.3 % 445   3.8 % 12.5 % 6,263   30   (14.0 %) (3.1 %) 157   504   563
Visa Inc. 824 5.8 % 11.0 % 780 6.6 % 11.7 % 10,330 44 (7.7 %) 0.4 % 173 758 863
 
Visa Debit Programs
US $ 474 9.6 % 9.6 % $ 359 10.5 % 10.5 % 9,552 $ 115 7.1 % 7.1 % 916 407 494

International

495   (8.3 %) 5.6 % 113   2.0 % 17.2 % 4,125   382   (10.9 %) 2.5 % 3,109   1,032   1,108
Visa Inc. 969 (0.3 %) 7.5 % 473 8.3 % 12.1 % 13,677 497 (7.4 %) 3.5 % 4,025 1,439 1,602
 
For the 12 Months Ended March 31, 2017

Total
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Payments
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Payments
Transactions
(millions)

 

Cash
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Cash
Transactions
(millions)

All Visa Credit & Debit
Asia Pacific $ 2,128 3.6 % 4.5 % $ 1,616 7.8 % 8.7 % 21,473 $ 511 (7.8 %) (6.6 %) 3,767
Canada 244 5.9 % 6.4 % 224 6.0 % 6.5 % 3,002 20 4.8 % 5.2 % 43
CEMEA 952 5.5 % 8.6 % 277 16.1 % 17.9 % 10,715 675 1.8 % 5.3 % 4,999
LAC 949 4.9 % 10.2 % 371 8.3 % 13.2 % 12,023 578 2.8 % 8.4 % 4,648

US

3,631 10.2 % 10.2 % 3,096 11.2 % 11.2 % 59,479 536 4.6 % 4.6 % 3,794
Europe (1) 1,594   1,156   24,414   438   3,536
Visa Inc. 9,498 28.6 % 30.1 % 6,740 32.8 % 33.6 % 131,106 2,758 19.3 % 22.4 % 20,788
 
Visa Credit Programs
US $ 1,677 17.2 % 17.2 % $ 1,618 17.7 % 17.7 % 19,913 $ 59 4.2 % 4.2 % 67

International

2,504   27.7 % 29.3 % 2,300   26.0 % 27.6 % 33,125   205   50.0 % 53.1 % 1,039
Visa Inc. 4,182 23.3 % 24.2 % 3,918 22.5 % 23.3 % 53,037 263 36.6 % 38.6 % 1,106
 
Visa Debit Programs
US $ 1,954 4.8 % 4.8 % $ 1,477 4.8 % 4.8 % 39,566 $ 477 4.6 % 4.6 % 3,727

International

3,362   57.8 % 62.8 % 1,344   187.9 % 193.9 % 38,503   2,018   21.3 % 25.5 % 15,955
Visa Inc. 5,316 33.1 % 35.3 % 2,821 50.4 % 51.2 % 78,069 2,495 17.7 % 20.9 % 19,682
 
For the 12 Months Ended March 31, 2016

Total
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Payments
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Payments
Transactions
(millions)

 

Cash
Volume
($ billions)

 

Growth
(Nominal
USD)

 

Growth
(Constant
USD)

 

Cash
Transactions
(millions)

 

Accounts
(millions)

 

Cards
(millions)

All Visa Credit & Debit
Asia Pacific $ 2,054 2.7 % 10.1 % $ 1,499 7.7 % 15.0 % 18,709 $ 555 (8.8 %) (1.2 %) 4,051 753 856
Canada 230 (8.4 %) 5.4 % 212 (8.5 %) 5.2 % 2,759 19 (6.2 %) 7.7 % 46 47 54
CEMEA 902 (12.5 %) 7.8 % 238 (4.9 %) 15.7 % 7,983 664 (14.9 %) 5.2 % 4,788 330 321
LAC 905 (15.4 %) 9.0 % 342 (15.8 %) 11.9 % 11,011 563 (15.2 %) 7.3 % 4,431 406 439

US

3,296   8.9 % 8.9 % 2,784   9.7 % 9.7 % 54,523   512   5.2 % 5.2 % 3,777   662   794
Visa Inc. 7,388 0.1 % 9.0 % 5,076 5.3 % 11.4 % 94,985 2,312 (9.6 %) 4.0 % 17,092 2,197 2,465
 
Visa Credit Programs
US $ 1,432 10.2 % 10.2 % $ 1,375 10.4 % 10.4 % 16,754 $ 56 5.8 % 5.8 % 66 255 301

International

1,961   (0.3 %) 12.2 % 1,825   1.7 % 13.6 % 24,900   136   (21.0 %) (3.4 %) 644   504   563
Visa Inc. 3,393 3.9 % 11.3 % 3,200 5.3 % 12.2 % 41,654 193 (14.6 %) (0.9 %) 711 758 863
 
Visa Debit Programs
US $ 1,865 8.0 % 8.0 % $ 1,409 9.0 % 9.0 % 37,769 $ 456 5.1 % 5.1 % 3,710 407 494

International

2,130   (10.7 %) 6.3 % 467   (4.1 %) 13.9 % 15,562   1,663   (12.4 %) 4.4 % 12,672   1,032   1,108
Visa Inc. 3,995 (2.8 %) 7.1 % 1,876 5.4 % 10.2 % 53,332 2,119 (9.1 %) 4.5 % 16,382 1,439 1,602

(1)

 

Europe includes volume and transactions for the 9 months ended March 31, 2017 only.

 

2. Europe Co-badge Payments Volume Growth Impact

The table below reflects total Visa Inc., International and Europe payments volume growth rates over prior year adjusted to exclude the Europe co-badge volumes.

           

Growth
(Constant USD)

Growth
(Nominal USD)

Quarter Ended Quarter Ended
Sep'16     Dec'16     Mar'17 Sep'16     Dec'16     Mar'17
Visa Inc. - As Reported 47.2 % 38.7 %

37.2

% 47.0 % 38.1 % 38.1 %
excluding co-badge 38.5 % 38.7 %

37.2

% 38.3 % 38.1 % 38.1 %
 
International - As Reported 91.6 % 70.7 % 68.4 % 90.9 % 68.9 % 71.0 %
excluding co-badge 72.3 % 70.7 % 68.4 % 71.7 % 68.9 % 71.0 %
 
Europe Normalized (1) 6.8 % (17.7 %) (17.5 %) (1.2 %) (26.3 %) (25.1 %)
excluding co-badge 7.2 % 9.2 % 8.9 % (3.0 %) (4.7 %) (3.0 %)

(1)

  Europe volumes were first included in Visa Inc.’s volumes starting in the quarter ended September 30, 2016. Europe Normalized growth includes Europe volumes for the prior year period before Visa Inc. acquired Visa Europe.
 

Note:

Effective June 9, 2016, Article 8 of the EU Interchange Fee Regulation states that payment card networks cannot impose reporting requirements or the obligation to pay fees on payment transactions where their payment brand is present but their network is not used. Prior to this regulation, Visa collected a small service fee in a few countries, particularly France, on domestic payment transactions where Visa cards are co-badged with a domestic network. Clients in Europe continued to report co-badged volume through the quarter ended September 2016; however, effective with the quarter ended December 2016 Visa co-badge volume is no longer included in reported volume.

3. Cross-Border Volume

The table below represents cross-border volume growth for cards carrying the Visa, Visa Electron, V PAY, Interlink and PLUS brands. Cross-border volume refers to payments and cash volume where the issuing country is different from the merchant country.

     
Period

Growth
(Nominal USD)

Growth
(Constant USD)

Normalized
Growth (2)
(Constant USD)

3 Months Ended

March 31, 2017 (1) 129 % 132 % 11 %
December 31, 2016 (1) 135 % 140 % 12 %
September 30, 2016 (1) 146 % 149 %

10

%

June 30, 2016 2 % 5 %
March 31, 2016 0 % 5 %
 

12 Months Ended

March 31, 2017 (1) 104 % 107 %
March 31, 2016 (2 %) 5 %
 

(1)

  Europe volumes and transactions were first included as part of Visa Inc. starting in the quarter ended September 30, 2016. Normalized Growth includes Europe activity in prior year periods before Visa Inc. acquired Visa Europe.

(2)

Europe is included as part of Visa Inc. effective with the 3 months ended September 30, 2016.
 

4. Visa Processed Transactions

The table below represents transactions involving Visa, Visa Electron, V PAY, Interlink and PLUS cards processed on Visa’s networks.

     
Period

Processed
Transactions
(millions)

Growth

Normalized
Growth (2)

3 Months Ended

March 31, 2017 (1) 26,256 42 % 12 %
December 31, 2016 (1) 27,329 44 % 13 %
September 30, 2016 (1) 25,921 41 % 12 %
June 30, 2016 19,778 10 %
March 31, 2016 18,475 9 %
 

12 Months Ended

March 31, 2017 (1) 99,283 34 %
March 31, 2016 73,850 8 %

(1)

  Europe volumes and transactions were first included as part of Visa Inc. starting in the quarter ended September 30, 2016. Normalized Growth includes Europe activity in prior year periods before Visa Inc. acquired Visa Europe.

(2)

Europe is included as part of Visa Inc. effective with the 3 months ended September 30, 2016.
 

Footnote

Payments volume represents the aggregate dollar amount of purchases made with cards carrying the Visa, Visa Electron, V PAY and Interlink brands for the relevant period, and cash volume represents the aggregate dollar amount of cash disbursements obtained with these cards for the relevant period and includes the impact of balance transfers and convenience checks, but excludes proprietary PLUS volume. Total volume represents payments and cash volume.

Visa payment products are comprised of credit and debit programs, and data relating to each program is included in the tables. Debit programs include Visa’s signature based and Interlink (PIN) debit programs.

The data presented is based on results reported quarterly by Visa’s financial institution clients on their operating certificates. Estimates may be utilized if data is unavailable.

On occasion, previously presented information may be updated. Prior period updates, if any, are not material.

Europe is reported and included in Visa Inc. results effective with the 3 months ended September 2016. Visa’s CEMEA region is comprised of countries in Central Europe, the Middle East and Africa. Several European Union countries in Central Europe, Israel and Turkey are not included in CEMEA. LAC is comprised of countries in Central and South America and the Caribbean. International includes Asia Pacific, Canada, CEMEA, Europe and LAC.

Information denominated in U.S. dollars is calculated by applying an established U.S. dollar/local currency exchange rate for each local currency in which Visa Inc. volumes are reported (“Nominal USD”). These exchange rates are calculated on a quarterly basis using the established exchange rate for each quarter. To eliminate the impact of foreign currency fluctuations against the U.S. dollar in measuring performance, Visa Inc. also reports year-over-year growth in total volume, payments volume and cash volume on the basis of local currency information (“Constant USD”). This presentation represents Visa’s historical methodology which may be subject to review and refinement.

Contacts

Visa Inc.
Investor Relations:
Jack Carsky, Joon Huh, or Victoria Hyde-Dunn, 650-432-7644
ir@visa.com
or
Media Relations:
Nathaniel Sillin, 415-805-4892
globalmedia@visa.com

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