Visa Inc. Fiscal Third Quarter Financial Results July 24, 2013 Exhibit 99.2 |
Fiscal Third Quarter 2013 Financial Results 2 Forward-Looking Statements • the impact of laws, regulations and marketplace barriers, including: • rules capping debit interchange reimbursement fees promulgated under the U.S. Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act; • rules under the Dodd-Frank Act expanding issuers' and merchants' choice among debit payment networks; • increased regulation outside the United States and in other product categories; • increased government support of national payment networks outside the United States; and • rules about consumer privacy and data use and security; • developments in litigation and government enforcement, including • those affecting interchange reimbursement fees, antitrust and tax and • our failure to make our multidistrict interchange litigation settlement effective; • economic factors, such as: • an increase or spread of the current European crisis involving sovereign debt and the euro; • failure to resolve the current sequestration in the United States; • cross-border activity and currency exchange rates; • material changes in our clients' performance compared to our estimates; and • other global economic, political and health conditions; • industry developments, such as competitive pressure, rapid technological developments and disintermediation from the payments value stream; • system developments, such as: • disruption of our transaction processing systems or the inability to process transactions efficiently; • account data compromises or increased fraudulent or other illegal activities involving our cards; and • issues arising at Visa Europe, including failure to maintain interoperability between our systems; • costs arising if Visa Europe were to exercise its right to require us to acquire all of its outstanding stock; • loss of organizational effectiveness or key employees; • the other factors discussed in our most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission. You should not place undue reliance on such statements. Unless required to do so by law, we do not intend to update or revise any forward-looking statement, because of new information or future developments or otherwise. This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by the terms "believe," "continue," “expect," and similar references to the future. Examples of such forward-looking statements include, but are not limited to, statements we make about revenue, client incentives, expenses, operating margin, tax rate, earnings per share, capital expenditures, free cash flow and the growth of those items. By their nature, forward-looking statements: (i) speak only as of the date they are made, (ii) are neither statements of historical fact nor guarantees of future performance and (iii) are subject to risks, uncertainties, assumptions and changes in circumstances that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward-looking statements because of a variety of factors, including the following: failure to integrate acquisitions successfully or to effectively launch new products and businesses; and |
Fiscal Third Quarter 2013 Financial Results 3 Solid Fiscal Third Quarter Results • Strong operating revenues of $3.0 billion, up 17% over prior year • Quarterly net income of $1.2 billion and diluted earnings per share of $1.88, up 16% and 20%, respectively, over prior year adjusted results • Continued positive secular trends and spending momentum contributed to growth in key underlying business drivers • Repurchased 6 million shares of class A common stock in the open market at an average price of $176.75 per share, using $981 million of cash on hand Note: See appendix for reconciliation of adjusted non-GAAP measures to the closest comparable GAAP measures. |
Payments Volume US$ in billions, nominal, except percentages Note: Figures may not recalculate exactly due to rounding. Percentage changes are calculated based on whole numbers, not the rounded numbers presented. From time to time, previously submitted volume information may be updated. Prior period updates are not material. Constant dollar growth rates exclude the impact of foreign currency fluctuations against the U.S. dollar in measuring performance. Quarter ended March YOY Change (nominal) 8% 5% 7% YOY Change (constant) 9% 11% 6% U.S. 508 ROW 450 U.S. 530 ROW 495 U.S. 223 ROW 365 U.S. 244 ROW 393 U.S. 286 ROW 102 U.S. 284 ROW 85 958 588 370 1,025 637 388 2012 2013 Total Visa Inc. Credit Debit Fiscal Third Quarter 2013 Financial Results 4 Rest of World ROW = |
Payments Volume US$ in billions, nominal, except percentages Note: Current quarter payments volume and other select metrics are provided in the operational performance data supplement to provide more recent operating data. Service revenues continue to be recognized based on payments volume in the prior quarter. From time to time, 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 are calculated based on whole numbers, not the rounded numbers presented. Quarter ended June YOY Change (constant) 13% 12% 15% YOY Change (nominal) 9% 15% 11% 978 623 355 1,090 682 408 Total Visa Inc. Credit Debit 2012 2013 U.S. 513 ROW 466 U.S. 246 ROW 378 U.S. 267 U.S. 570 ROW 519 U.S. 270 ROW 412 ROW 108 U.S. 300 Fiscal Third Quarter 2013 Financial Results 5 ROW 88 Rest of World ROW = |
Payments Volume US$ in billions, nominal, except percentages Note: Figures may not recalculate exactly due to rounding. Percentage changes are calculated based on whole numbers, not the rounded numbers presented. From time to time, previously submitted volume information may be updated. Prior period updates are not material. Constant dollar growth rates exclude the impact of foreign currency fluctuations against the U.S. dollar in measuring performance. Quarter ended March 2012 2013 508 269 90 51 40 530 295 98 51 50 YOY Change (nominal) 10% 1% 4% 9% 25% YOY Change (constant) 4% 13% 1% 18% 28% United States Asia Pacific Latin America and Caribbean Canada Central and Eastern Europe, Middle East and Africa Fiscal Third Quarter 2013 Financial Results 6 |
Payments Volume US$ in billions, nominal, except percentages Note: Current quarter payments volume and other select metrics are provided in the operational performance data supplement to provide more recent operating data. Service revenues continue to be recognized based on payments volume in the prior quarter. From time to time, 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 are calculated based on whole numbers, not the rounded numbers presented. YOY Change (nominal) 10% 6% 11% 14% 25% YOY Change (constant) 14% 6% 11% 19% 28% Quarter ended June 2012 2013 United States Asia Pacific Latin America and Caribbean Canada Central and Eastern Europe, Middle East and Africa 513 570 277 88 56 45 304 101 59 56 Fiscal Third Quarter 2013 Financial Results 7 |
Fiscal Third Quarter 2013 Financial Results 8 Transactions in millions, except percentages Note: Processed transactions represent transactions involving Visa, Visa Electron, Interlink and Plus cards processed on Visa’s networks. Total transactions represent payments and cash transactions as reported by Visa clients on their operating certificates. From time to time, previously submitted transaction information may be updated. Prior period updates are not material. Figures may not recalculate exactly due to rounding. Percentage changes are calculated based on whole numbers, not the rounded numbers presented. 2012 2013 Quarter ended June 19,918 22,299 13,113 14,972 Credit 38% Credit 37% Debit 63% Debit 62% Total Transactions Processed Transactions Fiscal Third Quarter 2013 Financial Results 8 YOY Change 12% 14% |
9 Fiscal Third Quarter 2013 Financial Results Total Cards in millions, except percentages Note: From time to time, previously submitted card information may be updated. Prior period updates are not material. Figures may not recalculate exactly due to rounding. Percentage changes are calculated based on whole numbers, not the rounded numbers presented. Quarter ended March 778 1,225 2,003 801 1,333 2,134 Credit Debit Visa Inc. YOY Change 9% 7% 3% 2012 2013 9 Fiscal Third Quarter 2013 Financial Results |
Revenue – Q3 2013 US$ in millions, except percentages Note: Figures may not recalculate exactly due to rounding. Percentage changes are calculated based on whole numbers, not the rounded numbers presented. Gross Revenues Incentives Net Operating Revenues 3,179 (614) 2,565 3,522 3,001 Fiscal 2012 Fiscal 2013 YOY Change (15%) 17% 11% FY13 % of Gross Revenues 15% 85% (521) Fiscal Third Quarter 2013 Financial Results 10 |
Revenue Detail – Q3 2013 US$ in millions, except percentages Note: Figures may not recalculate exactly due to rounding. Percentage changes are calculated based on whole numbers, not the rounded numbers presented. YOY Change 15% 14% 7% 1% Fiscal 2012 Fiscal 2013 1,216 1,298 1,040 1,191 748 854 175 179 Service Revenues Data Processing Revenues International Transaction Revenues Other Revenues Fiscal Third Quarter 2013 Financial Results 11 |
Adjusted Operating Margin – Q3 2013 US$ in millions, except percentages Note: Operating margin is calculated as operating income divided by total operating revenues. Figures may not recalculate exactly due to rounding. Percentage changes are calculated based on whole numbers, not the rounded numbers presented. See appendix for reconciliation of adjusted non-GAAP measures to the closest comparable GAAP measures. Fiscal 2012 Fiscal 2013 Fiscal Third Quarter 2013 Financial Results 12 2,565 1,074 1,491 58% 3,001 1,173 1,828 61% 9% 22% 17% YOY Change 3 ppt Net Operating Revenues Total Operating Expenses Operating Income Operating Margin |
Adjusted Operating Expenses – Q3 2013 US$ in millions, except percentages Note: Figures may not recalculate exactly due to rounding. Percentage changes are calculated based on whole numbers, not the rounded numbers presented. See appendix for reconciliation of adjusted non-GAAP measures to the closest comparable GAAP measures. Fiscal 2012 Fiscal 2013 YOY Change 14% 5% 13% (3%) 22% 4% NM Personnel Marketing Network & Processing Professional Fees Depreciation & Amortization General & Administrative Litigation provision 0 435 242 102 99 84 112 493 252 117 103 101 108 Fiscal Third Quarter 2013 Financial Results 13 (1) |
Fiscal Third Quarter 2013 Financial Results 14 Other Financial Results • Cash, cash equivalents and available-for-sale investment securities of $6.5 billion at the end of the fiscal third quarter • Free cash flow of $2.0 billion for the fiscal third quarter • Capital expenditures of $122 million during the fiscal third quarter |
Financial Metrics for Fiscal Year 2013 Fiscal Third Quarter 2013 Financial Results 15 Around 13% 16% to 17% range Under $1 billion About 60% Annual net revenue growth Client incentives as % of gross revenues Marketing expenses Annual operating margin |
Financial Metrics for Fiscal Year 2013 Note: See appendix for reconciliation of adjusted non-GAAP measures to the closest comparable GAAP measures. Fiscal Third Quarter 2013 Financial Results 30% to 32% range Low twenties $425 million to $475 million range About $6 billion Annual free cash flow Capital expenditures Adjusted annual diluted class A common stock earnings per share growth Tax rate 16 |
Financial Metrics for Fiscal Year 2014 Annual free cash flow About $5 billion Mid to high teens Adjusted annual diluted class A common stock earnings per share growth Annual net revenue growth Low double digits Fiscal Third Quarter 2013 Financial Results 17 |
Appendix |
Fiscal Third Quarter 2013 Financial Results Reconciliation of Non-GAAP Financial Results US$ in millions, except percentages and per share data Our reported financial results for the three months ended June 30, 2012 included a litigation provision of $4.1 billion and related tax benefits associated with the interchange MDL, which is covered by the retrospective responsibility plan. We believe the presentation of adjusted financial results excluding the litigation provision adjustment provides a clearer understanding of our operating performance in that period. The following table presents our financial results for the three months ended June 30, 2013, as compared to our adjusted financial results for the three months ended June 30, 2012. A1 2013 2012 2013 2012 2013 2012 2013 2012 As reported $1,173 $ 5,172 61% (102)% 1,225 $ (1,839) $ 1.88 $ (2.74) $ Litigation provision — (4,098) — NM — 2,894 (3) — 4.30 Adjusted $1,173 $ 1,074 61% 58% 1,225 $ 1,055 $ 1.88 $ 1.56 $ Weighted-average number of diluted shares outstanding (4) 651 675 Three Months Ended June 30, Operating expenses Operating margin (1) Net income (loss) attributable to Visa Inc. Diluted earnings (loss) per share (2) (4,098) (1) Operating margin is calculated as operating income (loss) divided by total operating revenues. (2) Figures in the table may not recalculate exactly due to rounding. Diluted earnings (loss) per share is calculated based on whole numbers, not the rounded numbers presented. (3) The litigation provision adjustment to net income (loss) attributable to Visa Inc. is shown net of tax. The tax impact is determined by applying applicable federal and state tax rates to the litigation provision and applying any reserves for uncertain tax positions. (4) For the three months ended June 30, 2012, the computation of adjusted diluted earnings per share included the effect of 3 million incremental dilutive shares, which were excluded from the computation of reported diluted loss per share as they are considered anti-dilutive when applied to a net loss. |
Calculation of Free Cash Flow US$ in millions Additions (+) / Reductions (-) to Net income attributable to Visa Inc. Net income attributable to Visa Inc. (as reported) 1,225 3,788 Capital Assets + Depreciation and amortization 101 291 - Capital expenditures (122) (333) (21) (42) Litigation + Litigation provision (1) 3 - Settlement payments - (4,384) + Settlement payments funded by litigation escrow - 4,383 (1) 2 Share-based Compensation + Share-based compensation 41 139 Pension + Pension expense 8 25 - Pension contribution - - 8 25 Taxes + Income tax provision 608 1,703 - Income taxes paid (57) (478) 551 1,225 Changes in Working Capital (1) +/- Changes in other working capital accounts 168 (79) Total Free Cash Flow 1,971 5,058 Three Months Ended June 30, 2013 Nine Months Ended June 30, 2013 Fiscal Third Quarter 2013 Financial Results (1) Includes changes in client incentives, trade receivable/payable, settlement receivable/payable and personnel incentives. A2 |