![]() Visa Inc. Fiscal Second Quarter 2008 Financial Results April 28, 2008 Exhibit 99.2 |
![]() 2 Q2 FY 2008 Earnings Release Safe Harbor Reminder • The following materials and management’s discussion of them may contain “forward- looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the terms “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will” and similar expressions which are intended to identify forward-looking statements. In addition, any underlying assumptions are forward-looking statements. Such forward- looking statements include but are not limited to: (i) statements regarding certain of Visa’s goals and expectations with respect to earnings per share, revenue, operating margin and free cash flow and the growth rate in those items, as well as other measures of economic performance, and (ii) statements relating to the benefits of the 2007 reorganization and the 2008 initial public offering. • By their nature, forward-looking statements: (i) speak only as of the date they are made, (ii) are not guarantees of future performance or results and (iii) are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward-looking statements as a result of a variety of factors, including all the risks discussed under the heading “Risk Factors” in our Prospectus dated March 18, 2008, filed with the U.S. Securities and Exchange Commission pursuant to Rule 424(b)(4) on March 19, 2008. You are cautioned not to place undue reliance on such statements, which speak only as of the date of this presentation. Unless required to do so under U.S. federal securities laws or other applicable laws, we do not intend to update or revise any forward-looking statements. |
![]() 3 Q2 FY 2008 Earnings Release Strong Opening Quarter • On an adjusted basis – Quarterly net income of $401 million – 48% increase in net income over 2007 period – Earnings per share of $0.52 on a diluted basis • Achieved significant year-over-year growth – Payments volume of 19% to $681 billion – Total volume of 21% to $1.1 trillion • Operating revenues of $1.5 billion increased 22% over 2007 period Note: Please see appendix for reconciliation of adjusted non-GAAP measures to the closest comparable GAAP measures. |
![]() 4 Q2 FY 2008 Earnings Release Legal Matters • FAS 5 reserve for litigation provision of $285 million recorded for covered litigation • Litigation escrow account established through the deposit of $3 billion in IPO proceeds, as directed by the litigation committee • American Express settlement payment of $1.13 billion made in March 2008, of which $185 million was provided by five co- defendant banks and $945 million was funded by the litigation escrow |
![]() 5 Q2 FY 2008 Earnings Release Payments Volume & Processed Transactions 12.8% 28.5% 45 Canada 30.5% 44.1% 47 Latin America and Caribbean (LAC) 15.1% 8,800 Visa Inc. YOY Growth Processed Transactions Quarter ended March 2008 40.1% 44.1% 18 Central Europe, Middle East & Africa (CEMEA) YOY Growth 18.5% 24.3% 12.4% Nominal USD 15.8% $681 Visa Inc. 19.6% 158 Asia Pacific 12.4% $413 United States Constant USD Payments Volume Quarter ended December 2007 US$ in billions, transactions in millions |
![]() 6 Q2 FY 2008 Earnings Release Q2 FY 2008 Q1 FY 2008 Q2 FY 2007 Adj. Actual Adj. Actual Adj. Pro forma Net Revenues 1,453 $ 1,488 $ 1,191 $ Total Operating Expenses 783 757 744 Operating Income 670 731 447 Operating Margin 46.1% 49.1% 37.5% Net Income 401 $ 443 $ 271 $ Adjusted EPS 0.52 $ 0.56 $ NA Fiscal Second Quarter 2008 - Financial Performance Adjusted Basis US$ in millions, excluding percentages and EPS data Note: Please see appendix for reconciliation of adjusted non-GAAP measures to the closest comparable GAAP measures. |
![]() 7 Q2 FY 2008 Earnings Release Revenue Detail US$ in millions Q2 FY 2008 Q2 FY 2007 Percent Actual Pro forma Change Service fees 792 $ 614 $ 29% Data processing fees 494 370 34% International transaction fees 379 281 35% Other revenue 126 113 12% Gross revenues 1,791 1,378 30% Incentives (338) (187) 81% Net revenues 1,453 $ 1,191 $ 22% |
![]() 8 Q2 FY 2008 Earnings Release Expense Detail Adjusted Basis US$ in millions Q2 FY 2008 Q2 FY 2007 Percent Actual Pro forma Change Personnel 272 $ 269 $ 1% Network, EDP & communications 78 69 13% Advertising, marketing, and promotion 215 182 18% Professional and consulting fees 94 102 (8%) Depreciation and amortization 42 37 14% Administrative and other 75 72 4% Litigation provision 7 13 (46%) Total adjusted operating expenses 783 744 5% Litigation provision 285 - NM Restructuring 19 36 (47%) Purchase Amortization 17 17 - Sub Total 321 53 Total operating expenses (as reported) 1,104 $ 797 $ 39% Note: Restructuring contains both Personnel and Professional fees expenses associated with organizational changes. Please see appendix for reconciliation of adjusted non-GAAP measures to the closest comparable GAAP measures. |
![]() 9 Q2 FY 2008 Earnings Release Balance Sheet • Cash, cash equivalents, restricted cash and investment securities available-for-sale of $8.0 billion during the fiscal second quarter • Restricted cash for litigation escrow of $2.1 billion reflects the $945 million March payment to American Express • Capital expenditures during the fiscal second quarter were $166 million • Goodwill increased by $1.1 billion during the fiscal second quarter US$ in millions |
![]() 10 Q2 FY 2008 Earnings Release Financial metrics over the next three years • Annual net revenue growth: 11-15 % • Annual adjusted operating margin (adjusted earnings before interest and taxes): low 40 % range • Annual adjusted diluted class A common earnings per share growth: 20%+ • Annual free cash flow (cash flow from operations plus cash reimbursements from litigation escrow less capital spending): $1 billion + |
![]() Appendix – Reconciliation of Non-GAAP Measures |
![]() 12 Q2 FY 2008 Earnings Release Quarterly Results of Operations (1) Visa Inc. had no operations prior to the reorganization on October 1, 2007. In order to provide insight into our operating results, the pro forma results of operations for the prior periods have been prepared for comparative purposes assuming that the reorganization had occurred on October 1, 2006. Fiscal 2008 Quarter Ended December 31, 2006 March 31, 2007 June 30, 2007 September 30, 2007 December 31, 2007 Actual Operating Revenues Service fees 577 $ 614 $ 661 $ 730 $ 732 $ Data processing fees 377 370 449 463 492 Volume and support incentives (136) (187) (175) (216) (250) International transaction fees 247 281 311 353 381 Other revenues 108 113 119 133 133 Total operating revenues 1,173 1,191 1,365 1,463 1,488 Operating Expenses Personnel 273 269 293 324 283 Network, EDP, and communications 68 69 77 80 83 Advertising, marketing, and promotion 205 182 245 443 210 Professional and consulting fees 101 136 159 157 98 Depreciation and amortization 55 54 55 63 62 Administrative and other 76 73 94 105 74 Litigation provision 2 13 (1) 2,638 - Total operating expenses 780 797 921 3,810 810 Operating income (loss) 393 394 444 (2,347) 678 Other Income (Expense) Equity in earnings of unconsolidated affiliates - - - - 1 Interest expense (23) (24) (25) (24) (45) Investment income, net 40 36 56 65 41 Other 8 - 8 Total other income 17 12 39 41 5 Income (loss) before income taxes 410 406 483 (2,306) 683 Income tax expense (benefit) 161 160 184 (652) 259 Net income (loss) 249 $ 246 $ 299 $ (1,654) $ 424 $ Pro forma (1) Fiscal 2007 Quarter Ended US$ in millions |
![]() 13 Q2 FY 2008 Earnings Release For theThree Months Ended For the Six Months Ended March 31, 2007 March 31, 2007 Operating Revenues Service fees 614 $ 1,191 $ Data processing fees 370 747 Volume and support incentives (187) (323) International transaction fees 281 529 Other revenues 113 221 Total operating revenues 1,191 2,365 Operating Expenses Personnel 269 542 Network, EDP, and communications 69 137 Advertising, marketing, and promotion 182 387 Professional and consulting fees 136 237 Depreciation and amortization 54 109 Administrative and other 74 150 Litigation provision 13 15 Total operating expenses 797 1,577 Operating income 394 788 Other Income (Expense) Interest expense (24) (48) Investment income, net 36 76 Total other income 12 28 Income before income taxes and minority interest 406 816 Income tax expense 160 321 Net income 246 $ 495 $ (1) Visa Inc. had no operations prior to the reorganization on October 1, 2007. In order to provide insight into our operating results, the pro forma results of operations for the prior periods have been prepared for comparative purposes assuming that the reorganization had occurred on October 1, 2006. These pro forma statements of operations have been prepared in accordance with Statement of Financial Accounting Standards No. 141, "Business Combinations." Pro Forma Results of Operations (1) US$ in millions |
![]() 14 Q2 FY 2008 Earnings Release Adjusted Operating Income and Net Income US$ in millions For the three Months Ended For the Six Months Ended Pro forma for the Three Months Ended March 31, 2008 March 31, 2008 March 31, 2007 Net income (as reported) 314 $ 738 $ 246 $ Addback: Income tax expense (as reported) 56 315 160 Net income before taxes and minority interest (as reported) 370 $ 1,053 $ 406 $ Adjustments: Covered litigation reserve (1) 285 285 - Restructuring (2) 19 55 36 Asset step-up amortization (3) 17 34 17 Adjustments to operating income 321 374 53 Interest accretion on American Express settlement (4) 23 46 - Investment income on IPO proceeds (5) (7) (7) - Underwater contract (LIBOR Adjustment) (6) (28) (36) - Adjustments to non-operating income (12) 3 - Total Adjustments 309 377 53 Adjusted net income before tax 679 1,430 459 Adjusted income tax expense (7) (278) (586) (188) Adjusted net income 401 $ 844 $ 271 $ Operating income (as reported) 349 $ 1,027 $ 394 $ Addback: Adjustments to operating income 321 374 53 Adjusted operating income 670 $ 1,401 $ 447 $ Operating revenues (as reported) 1,453 $ 2,940 $ 1,191 $ Adjusted operating margin 46% 48% 38% (1) Litigation expense recorded in the period related to the covered litigation. Settlements of, or judgments in, covered litigation will be paid from the litigation escrow account. (2) Restructuring costs, primarily severance in fiscal 2008, associated with workforce consolidation and elimination of overlapping functions. (3) Non-cash amortization and depreciation of the incremental basis in technology and building assets acquired in the reorganization. (4) Non-cash interest expense recorded on future payments to be made under the settlement agreement with American Express. These payments will be paid from the litigation escrow account. (5) Investment income earned during the period on all IPO proceeds held, including amounts the Company intends to use in October 2008 to redeem all class C (series II) common stock and a portion of the class C (series III) common stock held by Visa Europe. (6) Other income recorded in the period as a result of a reduction in the Company's estimated liability under the Framework Agreement, which governs its relationship with Visa Europe. This reduction was a result of lower LIBOR rates in the period. This liability will not continue after the October 2008 redemptions. (7) Reflects a normalized tax rate of 41%. Pro forma for the Six Months Ended March 31, 2007 495 $ 321 816 $ - 47 34 81 - - - - 81 897 (368) 529 $ 788 $ 81 869 $ 2,365 $ 37% Total operating expenses (as reported) $ Less: Adjustments to operating expenses (81) Adjusted operating expenses $ $ 1,104 (321) $ 783 $ (374) $ $ (53) $ 1,577 1,496 1,914 744 1,540 797 |
![]() 15 Q2 FY 2008 Earnings Release Weighted Avg. Class A Common Stock Outstanding Used in the Calculation of Adjusted Diluted EPS (1) For GAAP purposes, the number of class A common shares outstanding is weighted to reflect the issuance of 446,600,000 shares at the IPO date of March 19, 2008. In the calculation of the adjusted weighted average shares outstanding, these shares are assumed to have been issued at the beginning of each period presented. (2) For GAAP purposes, the number of class B common shares outstanding is weighted to reflect the redemption of 154,738,487 shares on March 28, 2008 and the reduction of the conversion ratio applicable to remaining shares outstanding to 0.71 to 1. In the calculation of the adjusted weighted average shares outstanding, these shares are weighted to assume that the redemption and reduction in conversion ratio had occurred at the beginning of each period presented. (3) For GAAP purposes, the number of class C (series I, II, III & IV) common shares is weighted to reflect the redemption of 159,657,751 shares of class C (series I) common stock on March 28, 2008, and the reclassification of all shares of class C (series II) common stock to temporary equity and 35,263,585 shares of class C (series III) common stock to liabilities on the IPO date of March 19, 2008. Upon reclassification of the class C (series II) and class C (series III) common stock these shares are no longer convertible into shares of class A common stock. In the calculation of adjusted weighted average shares outstanding, these shares are weighted to assume that the redemption and reclassifications occurred at the beginning of each period presented. (4) For GAAP purposes, the number of class A common shares outstanding is weighted to reflect the assumed issuance of class A common stock underlying stock options, restricted stock and restricted stock units to employees and directors at the IPO date of March 19, 2008, applying the treasury method. In the calculation of the adjusted weighted average shares outstanding, these shares are weighted to assume the issuance of these awards at the beginning of each period presented. The assumed number of shares underlying stock options assumed issued for adjusted non-GAAP purposes assumes the repurchase of shares at the share price on March 31, 2008 of $62.36. For the Three Months Ended For the Six Months Ended March 31, 2008 March 31, 2008 Weighted Average Shares Outstanding - GAAP 778 762 Class A Shares (1) 383 415 Class B Shares (2) (226) (238) Class C Shares (3) (161) (165) Class A Share Equivalents (4) 5 5 1 17 Adjusted Weighted Average Shares Outstanding - Non GAAP 779 779 Share Adjustments (in millions) |
![]() 16 Q2 FY 2008 Earnings Release For theThree Months Ended For the Six Months Ended March 31, 2008 March 31, 2008 Adjusted net income 401 $ 844 $ Adjusted weighted average number of diluted shares outstanding 779 779 Adjusted diluted earnings per share 0.52 $ 1.08 $ (in millions, except per share data) • Management believes the presentation of adjusted operating income and adjusted net income provides a clearer understanding of the one-time items related to the Company's reorganization and initial public offering. These measures also adjust for expenses related to covered litigation that will be funded by the litigation escrow account. These items have a significant impact on our financial results but are either non-recurring or have no operating cash impact. • Recognizing that we have a very complex equity structure incorporating multiple classes and series of common stock, the Company has also presented adjusted diluted class A earnings per share calculated below based on adjusted net income and the adjusted weighted average number of shares outstanding in the periods presented. This non-GAAP financial measure has been presented to illustrate our per share results reflecting our capital structure after the redemption of all class C (series II) common stock and a portion of class C (series III) common stock, which the Company intends to redeem in October 2008. The class C (series II) common stock is classified as temporary equity and the class C (series III) common stock is classified as a liability on the Company's consolidated balance sheet at March 31, 2008. Management believes this non-GAAP presentation provides the reader with a clearer understanding of our per share results by excluding these shares to be redeemed and allocating adjusted net income only to permanent equity. Class A Common Stock Adjusted Diluted Earnings per Share |