Visa Inc. Reports Strong Fiscal First Quarter 2017 Results

February 2, 2017 at 4:06 PM EST
  • GAAP net income of $2.1 billion or $0.86 per share, an increase of 7% and 7%, respectively
  • Adjusted net income and earnings per share growth of 23% and 23%, respectively
  • Net operating revenue of $4.5 billion, an increase of 25%
  • Accelerating growth in payments volume, cross-border commerce and processed transactions

 

SAN FRANCISCO--(BUSINESS WIRE)--Feb. 2, 2017-- Visa Inc. (NYSE:V) today announced financial results for the Company’s fiscal first quarter 2017, ended December 31, 2016. GAAP net income for the quarter was $2.1 billion or $0.86 per share, an increase of 7% and 7%, respectively, over the prior year’s results. Exchange rate shifts versus the prior year negatively impacted earnings per share growth by approximately 3 percentage points.

Excluding a $255 million non-cash, non-operating income item recorded upon the remeasurement of the Visa Europe put option in fiscal first quarter 2016, net income and earnings per share for the fiscal first quarter 2017 increased 23% and 23%, respectively, over the prior year's adjusted results. 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 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.

Net operating revenue in the fiscal first quarter of 2017 was $4.5 billion, an increase of 25%, driven by the inclusion of Europe and continued growth in processed transactions and nominal payments volume. Exchange rate shifts versus the prior year negatively impacted reported net operating revenue growth by approximately 3 percentage points.

“Visa’s fiscal 2017 is off to a terrific start with a strong first quarter of revenue and earnings growth driven by accelerating growth in payments volume, cross-border commerce and processed transactions in virtually all regions around the world,” said Alfred F. Kelly, Jr., Chief Executive Officer of Visa Inc. “As we look ahead, we continue to see good momentum in the business driven by domestic and cross-border volumes, increasing consumer participation in electronic payments in developing markets, and the further acceleration of e-commerce in developed markets,” added Kelly. “We remain focused on the integration of Europe which is proceeding well.”

Fiscal First Quarter 2017 Financial Highlights:

Payments volume growth, on a constant dollar basis, for the three months ended September 30, 2016, on which fiscal first quarter service revenue is recognized, was 47% over the prior year at $1.9 trillion.

Payments volume growth, on a constant dollar basis, for the three months ended December 31, 2016, 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. Excluding Europe co-badge payments volume from the three months ended September 30, 2016, growth was 38.5%, flat compared to the three months ended December 31, 2016. For additional information, refer to the Europe Co-badge Payments Volume Growth Impact table included in the Operational Performance Data.

Cross-border volume growth, on a constant dollar basis, was 140% for the three months ended December 31, 2016. Cross-border volume growth, on a constant dollar basis when normalized for Europe, was 12% over the prior year. Normalized for Europe includes Europe in prior year results.

Total processed transactions, which represent transactions processed by Visa, for the three months ended December 31, 2016, were 27.3 billion, a 44% increase over the prior year. Total processed transactions growth, when normalized for Europe, was 13% over the prior year.

Fiscal first quarter 2017 service revenues were $1.9 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 28% over the prior year to $1.9 billion. International transaction revenues grew 44% over the prior year to $1.5 billion. Other revenues were $203 million, an increase of 2% over the prior year. Client incentives, which are a contra revenue item, were $1.0 billion and represent 18.9% of gross revenues.

GAAP operating expenses were $1.4 billion for the fiscal first quarter 2017, a 16% increase over the prior year's results, primarily driven by the inclusion of Europe and increases in personnel, marketing, and general and administrative expenses.

GAAP effective income tax rate was 30.5% for the quarter ended December 31, 2016.

Cash, cash equivalents, and available-for-sale investment securities were $13.2 billion at December 31, 2016.

The weighted-average number of diluted shares of class A common stock outstanding was 2.42 billion for the quarter ended December 31, 2016.

Notable Events:

In December 2016, the Company issued $567 million of commercial paper with a weighted-average interest rate of 0.79% and remaining maturities from 37 days to 66 days.

During the three months ended December 31, 2016, the Company repurchased 22.3 million shares of class A common stock, at an average price of $79.77 per share, using $1.8 billion of cash on hand. At December 31, 2016, the Company had $3.9 billion of remaining funds, authorized by the board of directors, available for share repurchase under the current programs.

On January 31, 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 March 7, 2017, to all holders of record of the Company’s common and preferred stock as of February 17, 2017.

In addition, on January 31, 2017, the Company held its 2017 Annual Meeting of Stockholders during which holders of the Company’s class A common stock at the close of business on December 2, 2016, voted on proposals enumerated in the Company’s proxy statement. Each of the nine nominees were elected to the Company’s Board of Directors; an advisory vote to approve our executive compensation and the ratification of KPMG as our independent auditor for fiscal year 2017 each were approved; and the frequency to hold an advisory vote to approve the Company’s executive compensation recommended by our stockholders was one year.

Financial Outlook for Fiscal Full-Year 2017:

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

  • Client incentives as a percent of gross revenues: 20.5% to 21.5% range;
  • Annual operating margin: Mid 60s; and
  • Effective tax rate: Low 30s.

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

  • Annual net revenue growth: 16% to 18% range on a nominal dollar basis, including 2.0 to 2.5 ppts of negative foreign currency impact; and
  • Annual diluted class A common stock earnings per share growth: Low 30s on a GAAP nominal dollar basis and 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. 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 First 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 https://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 https://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 usa.visa.com/about-visa, 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)
             
      December 31,     September 30,
      2016     2016
      (in millions, except par value data)
Assets            
Cash and cash equivalents     $ 5,824       $ 5,619  
Restricted cash—U.S. litigation escrow       1,028         1,027  
Investment securities:            
Trading       82         71  
Available-for-sale       3,615         3,248  
Settlement receivable       1,333         1,467  
Accounts receivable       1,120         1,041  
Customer collateral       1,006         1,001  
Current portion of client incentives       265         284  
Prepaid expenses and other current assets       416         555  
Total current assets       14,689         14,313  
Investment securities, available-for-sale       3,802         3,931  
Client incentives       484         448  
Property, equipment and technology, net       2,201         2,150  
Other assets       921         893  
Intangible assets, net       26,381         27,234  
Goodwill       14,892         15,066  
Total assets     $ 63,370       $ 64,035  
Liabilities            
Accounts payable     $ 118       $ 203  
Settlement payable       2,059         2,084  
Customer collateral       1,006         1,001  
Accrued compensation and benefits       433         673  
Client incentives       1,872         1,976  
Accrued liabilities       1,546         1,128  
Current maturities of long-term debt and short-term debt       2,313          
Accrued litigation       994         981  
Total current liabilities       10,341         8,046  
Long-term debt       14,138         15,882  
Deferred tax liabilities       4,822         4,808  
Deferred purchase consideration       1,164         1,225  
Other liabilities       1,179         1,162  
Total liabilities       31,644         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 December 31, 2016 and September 30, 2016

      2,516         2,516  

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

      3,201         3,201  
Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 1,854 and 1,871 shares issued and outstanding at December 31, 2016 and September 30, 2016, respectively                
Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at December 31, 2016 and September 30, 2016                
Class C common stock, $0.0001 par value, 1,097 shares authorized, 16 and 17 shares issued and outstanding at December 31, 2016 and September 30, 2016, respectively                
Treasury stock       (170 )       (170 )
Right to recover for covered losses       (128 )       (34 )
Additional paid-in capital       17,184         17,395  
Accumulated income       10,492         10,462  
Accumulated other comprehensive loss, net:            
Investment securities, available-for-sale       32         36  
Defined benefit pension and other postretirement plans       (221 )       (225 )
Derivative instruments classified as cash flow hedges       27         (50 )
Foreign currency translation adjustments       (1,207 )       (219 )
Total accumulated other comprehensive loss, net       (1,369 )       (458 )
Total equity       31,726         32,912  
Total liabilities and equity     $ 63,370       $ 64,035  
                     
           
VISA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
      Three Months Ended
      December 31,
      2016   2015
      (in millions, except per share data)
Operating Revenues          
Service revenues     $ 1,918     $ 1,645  
Data processing revenues       1,892       1,479  
International transaction revenues       1,489       1,031  
Other revenues       203       198  
Client incentives       (1,041 )     (788 )
Net operating revenues       4,461       3,565  
           
Operating Expenses          
Personnel       571       499  
Marketing       218       194  
Network and processing       145       128  
Professional fees       80       72  
Depreciation and amortization       146       120  
General and administrative       186       156  
Litigation provision       15        
Total operating expenses       1,361       1,169  
Operating income       3,100       2,396  
           
Non-operating (Expense) Income          
Interest expense       (140 )     (29 )
Other       19       272  
Total non-operating (expense) income       (121 )     243  
Income before income taxes       2,979       2,639  
Income tax provision       909       698  
Net income     $ 2,070     $ 1,941  
           
Basic earnings per share          
Class A common stock     $ 0.86     $ 0.80  
Class B common stock     $ 1.41     $ 1.32  
Class C common stock     $ 3.43     $ 3.20  
           
Basic weighted-average shares outstanding          
Class A common stock       1,860       1,937  
Class B common stock       245       245  
Class C common stock       17       20  
           
Diluted earnings per share          
Class A common stock     $ 0.86     $ 0.80  
Class B common stock     $ 1.41     $ 1.32  
Class C common stock     $ 3.42     $ 3.20  
           
Diluted weighted-average shares outstanding          
Class A common stock       2,421       2,430  
Class B common stock       245       245  
Class C common stock       17       20  
                   
             
VISA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
      Three Months Ended
      December 31,
      2016     2015
      (in millions)
Operating Activities            
Net income     $ 2,070       $ 1,941  
Adjustments to reconcile net income to net cash provided by operating activities:            
Client incentives       1,041         788  
Fair value adjustment for the Visa Europe put option               (255 )
Share-based compensation       45         39  
Excess tax benefit for share-based compensation               (36 )
Depreciation and amortization of property, equipment, technology and intangible assets       146         120  
Deferred income taxes       77         45  
Right to recover for covered losses recorded in equity       (94 )        
Other       13         5  
Change in operating assets and liabilities:            
Settlement receivable       56         (35 )
Accounts receivable       (89 )       (75 )
Client incentives       (1,129 )       (850 )
Other assets       66         23  
Accounts payable       (102 )        
Settlement payable       79         (36 )
Accrued and other liabilities       316         317  
Accrued litigation       13         (12 )
Net cash provided by operating activities       2,508         1,979  
             
Investing Activities            
Purchases of property, equipment, technology and intangible assets       (171 )       (126 )
Investment securities, available-for-sale:            
Purchases       (1,032 )       (6,803 )
Proceeds from maturities and sales       788         739  
Purchases of / contributions to other investments       (2 )       (8 )
Proceeds / distributions from other investments               4  
Net cash used in investing activities       (417 )       (6,194 )
             
Financing Activities            
Repurchase of class A common stock       (1,893 )       (2,015 )
Dividends paid       (399 )       (340 )
Proceeds from issuance of senior notes               15,971  
Debt issuance costs               (77 )
Proceeds from issuance of commercial paper       566          
Payments from litigation escrow account—U.S. retrospective responsibility plan               11  
Cash proceeds from issuance of common stock under employee equity plans       56         29  
Restricted stock and performance-based shares settled in cash for taxes       (60 )       (81 )
Excess tax benefit for share-based compensation               36  
Net cash (used in) provided by financing activities       (1,730 )       13,534  
Effect of exchange rate changes on cash and cash equivalents       (156 )        
Increase in cash and cash equivalents       205         9,319  
Cash and cash equivalents at beginning of year       5,619         3,518  

Cash and cash equivalents at end of period

    $ 5,824       $ 12,837  
             
Supplemental Disclosure            
Income taxes paid, net of refunds     $ 96       $ 79  
Interest payments on debt     $ 244       $  
Accruals related to purchases of property, equipment, technology and intangible assets     $ 69       $ 40  
                     
                               
VISA INC.
FISCAL 2017 AND 2016 QUARTERLY RESULTS OF OPERATIONS
(UNAUDITED)
                               
      Fiscal 2017      
      Quarter Ended     Fiscal 2016 Quarter Ended
     

December 31,

   

September 30,

   

June 30,

   

March 31,

   

December 31,

      2016    

2016

   

2016(1)

   

2016

   

2015

      (in millions)
Operating Revenues                              
Service revenues     $ 1,918       $ 1,768       $ 1,635       $ 1,699       $ 1,645  
Data processing revenues       1,892         1,779         1,541         1,473         1,479  
International transaction revenues       1,489         1,489         1,084         1,045         1,031  
Other revenues       203         218         209         198         198  
Client incentives       (1,041 )       (993 )       (839 )       (789 )       (788 )
Net operating revenues       4,461         4,261         3,630         3,626         3,565  
                               
Operating Expenses                              
Personnel       571         690         509         528         499  
Marketing       218         300         189         186         194  
Network and processing       145         161         123         126         128  
Professional fees       80         113         138         66         72  
Depreciation and amortization       146         141         120         121         120  
General and administrative       186         230         246         164         156  
Litigation provision       15         1                 1          
Visa Europe Framework Agreement loss                       1,877                  
Total operating expenses       1,361         1,636         3,202         1,192         1,169  
Operating income       3,100         2,625         428         2,434         2,396  
                               
Non-operating (Expense) Income                              
Interest expense       (140 )       (135 )       (131 )       (132 )       (29 )
Other       19         20         125         139         272  
Total non-operating (expense) income       (121 )       (115 )       (6 )       7         243  
Income before income taxes       2,979         2,510         422         2,441         2,639  
Income tax provision       909         579         10         734         698  
Net income     $ 2,070       $ 1,931       $ 412       $ 1,707       $ 1,941  
                               

(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 FIRST QUARTER 2016
(UNAUDITED)
                   
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, non-operating income that we do not believe is indicative of our operating performance. As such, we believe the presentation of adjusted financial results provides a clearer understanding of our operating performance for the prior period presented. This amount is not subject to income tax and therefore has no impact on our reported income tax provision. There was no comparable adjustment recorded for the three months ended December 31, 2016. Adjusted net income, effective income tax rate 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 net income, effective income tax rate and diluted earnings per share, which are calculated in accordance with U.S. GAAP, to our respective non-GAAP adjusted financial measures for the three months ended December 31, 2015:
                   
      Three Months Ended
      December 31, 2015
            Effective Income     Diluted Earnings
(in millions, except percentages and per share data)     Net Income    

Tax Rate(1)

   

Per Share(1)

As reported     $ 1,941       26 %     $ 0.80  
Revaluation of Visa Europe put option       (255 )     3 %       (0.10 )
As adjusted     $ 1,686       29 %     $ 0.69  
Diluted weighted-average shares outstanding, as reported                   2,430  
                   

(1) Figures in the table may not recalculate exactly due to rounding. Effective income tax rate and diluted earnings per share figures are calculated based on unrounded numbers.

 
 

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 statements 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 and diluted earnings per share figures are calculated based on unrounded numbers.
(3) Operating margin is calculated as operating income divided by total operating revenues.
 

Operational Performance Data

The tables below provide information regarding the available operational results for the 3 months ended December 31, 2016, as well as the prior four quarterly reporting periods and the 12 months ended December 31, 2016 and 2015, 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 December 31, 2016
    Total   Growth   Growth   Payments   Growth   Growth   Payments   Cash   Growth     Growth     Cash
    Volume   (Nominal   (Constant   Volume   (Nominal   (Constant   Transactions   Volume   (Nominal     (Constant     Transactions
    ($ billions)   USD)   USD)   ($ billions)   USD)   USD)   (millions)   ($ billions)   USD)     USD)     (millions)
                                                 
All Visa Credit & Debit                                                
Asia Pacific   $538   2.8%   3.7%   $419   8.1%   9.4%   5,667   $120  

(12.5%

)

 

(12.4%

)

  922
Canada   62   4.9%   4.6%   58   5.0%   4.6%   772   5   4.7%     4.3%     10
CEMEA   246   7.7%   8.7%   72   19.7%   19.8%   2,821   174   3.4%     4.6%     1,301
LAC   250   5.6%   8.7%   98   9.5%   11.9%   3,154   152   3.2%     6.7%     1,215
US   937   11.2%   11.2%   803   12.4%   12.4%   15,304   134   4.6%     4.6%     933

Europe

  486           352           7,576   134               1,074
Visa Inc.   2,519   33.3%   34.2%   1,800   37.9%   38.6%   35,294   718   22.9%     24.4%     5,456
                                                 
Visa Credit Programs                                                
US   $444   19.4%   19.4%   $430   20.2%   20.2%   5,347   $14  

(0.2%

)

 

(0.2%

)

  16

International

  646   28.0%   29.4%   596   26.6%   28.1%   8,657   50   46.5%     47.2%     242
Visa Inc.   1,090   24.3%   25.1%   1,025   23.9%   24.6%   14,004   64   32.7%     33.1%     258
                                                 
Visa Debit Programs                                                
US   $493   4.8%   4.8%   $373   4.6%   4.6%   9,958   $120   5.2%     5.2%     917

International

  937   72.4%   74.8%   402   232.1%   234.9%   11,332   535   26.6%     28.6%     4,281
Visa Inc.   1,429   41.0%   42.1%   775   62.3%   62.6%   21,290   654   22.0%     23.6%     5,198
                                                 
    For the 3 Months Ended September 30, 2016
    Total   Growth   Growth   Payments   Growth   Growth   Payments   Cash   Growth     Growth     Cash        
    Volume   (Nominal   (Constant   Volume   (Nominal   (Constant   Transactions   Volume   (Nominal     (Constant     Transactions   Accounts   Cards
    ($ billions)   USD)   USD)   ($ billions)   USD)   USD)   (millions)   ($ billions)   USD)     USD)     (millions)   (millions)   (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   9.8%   9.8%   768   10.7%   10.7%   14,912   135   5.0%     5.0%     957   697   869

Europe

  646           468           9,581   177               1,421   479   543
Visa Inc.   2,619   41.6%   43.1%   1,858   47.0%   47.2%   36,076   761   30.1%     34.1%     5,792   2,747   3,121
                                                         
Visa Credit Programs                                                        
US   $424   18.3%   18.3%   $409   18.8%   18.8%   5,123   $15   6.1%     6.1%     18   276   363

International

  725   47.6%   47.4%   656   44.0%   43.6%   9,556   69   94.2%     98.3%     394   655   732
Visa Inc.   1,149   35.2%   35.1%   1,066   33.1%   32.9%   14,679   84   68.8%     71.3%     412   931   1,094
                                                         
Visa Debit Programs                                                        
US   $478   3.3%   3.3%   $358   2.8%   2.8%   9,788   $120   4.8%     4.8%     939   421   506

International

  992   84.9%   92.0%   434   276.1%   286.8%   11,609   557   32.4%     37.8%     4,441   1,395   1,520
Visa Inc.   1,470   47.1%   50.1%   793   70.8%   72.0%   21,397   677   26.5%     30.5%     5,380   1,816   2,027
                                                         
    For the 3 Months Ended June 30, 2016
    Total   Growth     Growth   Payments   Growth     Growth   Payments   Cash   Growth     Growth     Cash        
    Volume   (Nominal     (Constant   Volume   (Nominal     (Constant   Transactions   Volume   (Nominal     (Constant     Transactions   Accounts   Cards
    ($ billions)   USD)     USD)   ($ billions)   USD)     USD)   (millions)   ($ billions)   USD)     USD)     (millions)   (millions)   (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   223  

(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%   14,681   134   5.9%     5.9%     973   678   851
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   2,538
                                                             
Visa Credit Programs                                                            
US   $390   10.9%     10.9%   $376   10.9%     10.9%   4,583   $15   10.9%     10.9%     17   271   355

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   781   924
                                                             
Visa Debit Programs                                                            
US   $493   7.7%     7.7%   $374   8.5%     8.5%   10,097   $119   5.3%     5.3%     956   406   496

International

  537  

(3.3%

)

  8.0%   123   5.4%     17.1%   4,447   414  

(5.6%

)

  5.6%     3,248   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   Growth     Growth   Payments   Growth     Growth   Payments   Cash   Growth     Growth     Cash        
    Volume   (Nominal     (Constant   Volume   (Nominal     (Constant   Transactions   Volume   (Nominal     (Constant     Transactions   Accounts   Cards
    ($ billions)   USD)     USD)   ($ billions)   USD)     USD)   (millions)   ($ billions)   USD)     USD)     (millions)   (millions)   (millions)
                                                             
All Visa Credit & Debit                                                            
Asia Pacific   $511   3.2%     8.9%   $376   9.6%     14.4%   4,745   $135  

(11.1%

)

 

(3.8%

)

  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%     17.3%   2,185   148  

(6.2%

)

  5.3%     1,161   330   321
LAC   204  

(16.2%

)

  9.0%   79  

(15.2%

)

  15.0%   2,799   124  

(16.8%

)

  5.5%     1,076   406   439

US

  823   10.0%     10.0%   694   10.5%     10.5%   13,622   129   7.3%     7.3%     932   662   827
Visa Inc.   1,793   2.4%     9.3%   1,252   7.3%     12.0%   24,010   541  

(7.4%

)

  3.4%     4,198   2,197   2,498
                                                             
Visa Credit Programs                                                            
US   $349   10.5%     10.5%   $334   10.6%     10.6%   4,067   $14   8.8%     8.8%     16   255   333

International

  475   2.5%     11.9%   445   3.8%     13.1%   6,263   30  

(14.0%

)

 

(3.0%

)

  157   504   563
Visa Inc.   824   5.8%     11.3%   780   6.6%     12.0%   10,330   44  

(7.7%

)

  0.6%     173   759   896
                                                             
Visa Debit Programs                                                            
US   $474   9.6%     9.6%   $360   10.5%     10.5%   9,555   $115   7.1%     7.1%     916   407   494

International

  495  

(8.3%

)

  5.6%   113   2.0%     17.2%   4,125   382  

(10.9%

)

  2.7%     3,109   1,032   1,108
Visa Inc.   969  

(0.3%

)

  7.6%   473   8.3%     12.0%   13,680   497  

(7.3%

)

  3.6%     4,025   1,439   1,602
                                                             
    For the 3 Months Ended December 31, 2015
    Total   Growth     Growth   Payments   Growth     Growth   Payments   Cash   Growth     Growth     Cash        
    Volume   (Nominal     (Constant   Volume   (Nominal     (Constant   Transactions   Volume   (Nominal     (Constant     Transactions   Accounts   Cards
    ($ billions)   USD)     USD)   ($ billions)   USD)     USD)   (millions)   ($ billions)   USD)     USD)     (millions)   (millions)   (millions)
                                                             
All Visa Credit & Debit                                                            
Asia Pacific   $524   2.5%     10.2%   $387   7.8%     15.1%   4,900   $137  

(10.0%

)

 

(1.6%

)

  1,003   745   840
Canada   59  

(10.7%

)

  5.2%   55  

(10.9%

)

  4.9%   723   4  

(8.3%

)

  8.0%     11   47   54
CEMEA   228  

(13.5%

)

  6.0%   60  

(6.8%

)

  12.5%   2,099   168  

(15.7%

)

  3.8%     1,236   336   326
LAC   237  

(17.0%

)

  8.4%   90  

(17.5%

)

  11.5%   2,917   147  

(16.7%

)

  6.5%     1,175   407   440

US

  842   9.1%     9.1%   714   9.7%     9.7%   13,980   128   5.8%     5.8%     936   641   813
Visa Inc.   1,890  

(0.4%

)

  8.8%   1,306   4.9%     11.3%   24,619   584  

(10.6%

)

  3.6%     4,361   2,176   2,472
                                                             
Visa Credit Programs                                                            
US   $372   9.1%     9.1%   $357   9.1%     9.1%   4,391   $14   8.0%     8.0%     17   249   328

International

  505  

(1.2%

)

  11.5%   470   0.7%     12.8%   6,506   34  

(20.8%

)

 

(4.1%

)

  164   505   557
Visa Inc.   876   2.9%     10.5%   828   4.1%     11.2%   10,896   48  

(14.0%

)

 

(0.8%

)

  181   754   885
                                                             
Visa Debit Programs                                                            
US   $470   9.1%     9.1%   $357   10.2%     10.2%   9,589   $114   5.6%     5.6%     919   393   484

International

  543  

(11.7%

)

  5.9%   121  

(4.0%

)

  15.0%   4,134   422  

(13.8%

)

  3.6%     3,262   1,029   1,102
Visa Inc.   1,014  

(3.2%

)

  7.4%   478   6.3%     11.4%   13,723   536  

(10.3%

)

  4.0%     4,181   1,422   1,587
                                                             
    For the 12 Months Ended December 31, 2016
    Total   Growth     Growth   Payments   Growth     Growth   Payments   Cash   Growth     Growth     Cash
    Volume   (Nominal     (Constant   Volume   (Nominal     (Constant   Transactions   Volume   (Nominal     (Constant     Transactions
    ($ billions)   USD)     USD)   ($ billions)   USD)     USD)   (millions)   ($ billions)   USD)     USD)     (millions)
                                                     
All Visa Credit & Debit                                                    
Asia Pacific   $2,116   3.8%     5.9%   $1,594   8.7%     10.3%   20,711   $522  

(8.7%

)

 

(5.8%

)

  3,950
Canada   237   1.8%     5.5%   218   1.6%     5.4%   2,935   19   3.1%     7.0%     44
CEMEA   920   1.2%     9.0%   260   10.5%     18.0%   10,004   660  

(2.0%

)

  5.8%     4,959
LAC   913  

(3.3%

)

  9.7%   354  

(0.7%

)

  13.6%   11,805   559  

(4.8%

)

  7.4%     4,584
US   3,546   10.1%     10.1%   3,014   10.9%     10.9%   58,518   532   5.7%     5.7%     3,794

Europe (1)

  1,132             820             17,157   312               2,495
Visa Inc.   8,864   20.7%     24.5%   6,260   25.4%     27.7%   121,131   2,604   10.6%     17.3%     19,827
                                                     
Visa Credit Programs                                                    
US   $1,608   15.0%     15.0%   $1,549   15.3%     15.3%   19,120   $59   6.3%     6.3%     67

International

  2,358   21.0%     25.3%   2,173   20.2%     24.2%   31,099   185   30.8%     39.2%     952
Visa Inc.   3,966   18.5%     20.9%   3,722   18.1%     20.4%   50,219   243   23.9%     29.5%     1,020
                                                     
Visa Debit Programs                                                    
US   $1,938   6.3%     6.3%   $1,465   6.5%     6.5%   39,398   $473   5.6%     5.6%     3,727

International

  2,960   36.1%     46.7%   1,073   131.0%     147.0%   31,514   1,887   10.3%     19.2%     15,080
Visa Inc.   4,898   22.5%     27.5%   2,538   37.9%     40.3%   70,912   2,360   9.4%     16.2%     18,807
                                                     
    For the 12 Months Ended December 31, 2015
    Total   Growth     Growth   Payments   Growth     Growth   Payments   Cash   Growth     Growth     Cash        
    Volume   (Nominal     (Constant   Volume   (Nominal     (Constant   Transactions   Volume   (Nominal     (Constant     Transactions   Accounts   Cards
    ($ billions)   USD)     USD)   ($ billions)   USD)     USD)   (millions)   ($ billions)   USD)     USD)     (millions)   (millions)   (millions)
                                                             
All Visa Credit & Debit                                                            
Asia Pacific   $2,038   2.6%     10.1%   $1,466   6.6%     14.4%   18,057   $572  

(6.3%

)

  0.2%     4,020   745   840
Canada   233  

(8.3%

)

  5.8%   214  

(8.5%

)

  5.6%   2,702   19  

(6.1%

)

  8.4%     46   47   54
CEMEA   909  

(15.1%

)

  8.7%   236  

(7.7%

)

  16.1%   7,413   673  

(17.4%

)

  6.3%    

4,748

  336   326
LAC   944  

(12.3%

)

  10.0%   357  

(12.5%

)

  11.8%   10,733   588  

(12.1%

)

  9.0%     4,403   407   440

US

  3,222   8.6%     8.6%   2,718   9.3%     9.3%   53,108   503   4.5%     4.5%     3,735   641   813
Visa Inc.   7,346  

(0.1%

)

  9.1%   4,991   4.9%     11.1%   92,013   2,355  

(9.3%

)

  4.9%     16,952   2,176   2,472
                                                             
Visa Credit Programs                                                            
US   $1,398   10.5%     10.5%   $1,343   10.7%     10.7%   16,309   $55   6.5%     6.5%     66   249   328

International

  1,949  

(0.8%

)

  12.1%   1,808   1.5%     13.5%   24,171   141  

(23.1%

)

 

(3.4%

)

  640   505   557
Visa Inc.   3,348   3.6%     11.5%   3,151   5.2%     12.3%   40,480   196  

(16.6%

)

 

(0.7%

)

  706   754   885
                                                             
Visa Debit Programs                                                            
US   $1,823   7.1%     7.1%   $1,375   8.0%     8.0%   36,799   $448   4.2%     4.2%     3,669   393   484

International

  2,175  

(10.2%

)

  7.2%   465  

(5.4%

)

  12.4%   14,734   1,710  

(11.4%

)

  5.8%     12,577   1,029   1,102
Visa Inc.   3,998  

(3.1%

)

  7.1%   1,840   4.3%     9.1%   51,533   2,158  

(8.6%

)

  5.5%     16,246   1,422   1,587
                                                             
     
(1)  

Europe includes volume and transactions for the 6 months ended December 31, 2016 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     Sep'16     Dec'16
Visa Inc. - As Reported     47.2 %     38.6 %     47.0 %     37.9 %
excluding co-badge     38.5 %     38.6 %     38.3 %     37.9 %
                         
International - As Reported     91.5 %     70.5 %     90.9 %     68.7 %
excluding co-badge     72.2 %     70.5 %     71.7 %     68.7 %
                         

Europe Normalized (1)

    6.7 %     (17.8 %)     (1.2 %)     (26.4 %)
excluding co-badge     7.2 %     9.1 %     (3.1 %)     (4.9 %)
                                 

(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.

                   
      Growth     Growth     Normalized
      (Nominal     (Constant    

Growth (2)

Period     USD)     USD)     (Constant USD)
                   

3 Months Ended

                 

Dec 31, 2016 (1)

    135 %     140 %     12 %

Sep 30, 2016 (1)

    146 %     149 %     10 %
Jun 30, 2016     2 %     5 %      
Mar 31, 2016     0 %     5 %      
Dec 31, 2015    

(4

%)

    4 %      
                   

12 Months Ended

                 

Dec 31, 2016 (1)

    72 %     76 %      
Dec 31, 2015    

(2

%)

    6 %      
                       

4. Visa Processed Transactions

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

                   
      Processed            
      Transactions           Normalized
Period     (millions)     Growth    

Growth (2)

                   

3 Months Ended

                 

Dec 31, 2016 (1)

    27,329     44 %     13 %

Sep 30, 2016 (1)

    25,921     41 %     12 %
Jun 30, 2016     19,778     10 %      
Mar 31, 2016     18,475     9 %      
Dec 31, 2015     18,986    

8

%      
                   

12 Months Ended

                 

Dec 31, 2016 (1)

    91,502     26 %      
Dec 31, 2015     72,355     9 %      
                     
     
(1)  

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

(2)   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.
     

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.

 

Source: Visa Inc.

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