Visa Inc. Fiscal Fourth Quarter and Full-Year 2010 Financial Results October 27, 2010 EXHIBIT 99.2 |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 2 Forward-Looking Statements 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 “expect,” “will,” “continue” and similar references to the future. Examples of such forward-looking statements include, but are not limited to, statements we make about gross and net revenue, incentive payments, 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: – the impact of the U.S. Wall Street Reform and Consumer Protection Act, including • its effect on issuers' and retailers' network selection for debit transactions; • its effect on our financial institution customers and on debit interchange rates; • its effect on other product categories, such as credit; and • the adoption of similar and related laws and regulations elsewhere; – developments in current or future disputes, including: • interchange; • currency conversion; and • tax; – the risk that CyberSource's business will not be successfully integrated with Visa's, including: • the costs associated with the acquisition; and • slowed growth of eCommerce; – macroeconomic and industry factors such as: • currency exchange rates; • global economic, political, health and other conditions; • competitive pressure on customer pricing and in the payments industry generally; • material changes in our customers' performance compared to our estimates; and • disintermediation from the payments value stream through government actions or bilateral agreements; – systemic developments, such as: • disruption of our transaction processing systems or the inability to process transactions efficiently; • account data breaches involving card data stored by us or third parties; • increased fraudulent and other illegal activities involving our cards; • failure to maintain interoperability between our and Visa Europe's authorization and clearing and settlement 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; • changes in accounting principles or treatments; and the other factors discussed under the heading "Risk Factors" herein and in our most recent Annual Report on Form 10-K and our most recent Quarterly Reports on Form 10-Q. 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. |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 3 Solid Fiscal Fourth Quarter and Full-Year Results • Strong operating revenues of $2.1 billion for the fourth quarter and $8.1 billion for the full-year, up 13% and 17% over prior periods • Adjusted quarterly and annual net income of $695 million and $2.9 billion, or adjusted diluted earnings of $0.95 and $3.91 per share • Completed $1 billion stock repurchase of 4.6 million and 12.9 million class A common stock at an average price of $72.29 and $77.48 per share during the fiscal fourth quarter and full-year 2010 • Positive secular trends and continued spending momentum contributed to solid growth Note: Operating results include two months of CyberSource activity. See appendix for reconciliation of adjusted non-GAAP measures to the closest comparable GAAP measures. |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 4 261 426 687 802 481 321 Total Visa Inc. Credit Debit ROW 41 Quarter ended June US$ in billions, nominal, except percentages Payments Volume ROW 275 ROW 277 U.S. 412 U.S. 469 ROW 333 U.S. 192 234 ROW U.S. 204 U.S. 220 U.S. 266 ROW 55 Note: Figures may not sum due to rounding. Growth rates calculated based on whole numbers, not rounded numbers. From time to time, previously submitted volume information may be updated. Prior year volume information presented has not been updated, as changes made are not material. Constant dollar growth rates exclude the impact of foreign currency fluctuations against the U.S. dollar in measuring performance. YOY Change (nominal) 13% 23% 17% YOY Change (constant) 14% 9% 22% ROW = Rest of World 2009 2010 |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 5 720 452 268 828 501 327 Total Visa Inc. Credit Debit ROW 45 Quarter ended September US$ in billions, nominal, except percentages Payments Volume ROW 303 ROW 294 U.S. 417 U.S. 473 ROW 355 U.S. 195 258 ROW U.S. 207 U.S. 223 U.S. 266 ROW 61 YOY Change (nominal) 11% 22% 15% YOY Change (constant) 14% 9% 22% ROW = Rest of World 2009 2010 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 year volume information presented has not been updated, as changes made are not material. Payment volumes associated with CyberSource transactions are not included as they do not drive service revenues. Figures may not sum due to rounding. |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 6 2,680 1,689 990 3,037 1,861 1,176 Total Visa Inc. Credit Debit ROW 153 US$ in billions, nominal, except percentages ROW 1,058 ROW 1,080 U.S. 1,621 U.S. 1,752 ROW 1,285 U.S. 785 905 ROW U.S. 781 ROW 206 ROW = Rest of World YOY Change (nominal) 13% 10% 19% YOY Change (constant) 10% 5% 17% U.S. 837 U.S. 971 Twelve Months ended June Payments Volume Note: Figures may not sum due to rounding. Growth rates calculated based on whole numbers, not rounded numbers. From time to time, previously submitted volume information may be updated. Prior year volume information presented has not been updated, as changes made are not material. Constant dollar growth rates exclude the impact of foreign currency fluctuations against the U.S. dollar in measuring performance. 2009 2010 |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 7 2,699 1,690 1,009 3,145 1,910 1,235 Total Visa Inc. Credit Debit ROW 158 US$ in billions, nominal, except percentages ROW 1,081 ROW 1,116 U.S. 1,617 U.S. 1,808 ROW 1,337 U.S. 766 923 ROW U.S. 794 ROW 220 ROW = Rest of World YOY Change (nominal) 17% 13% 23% YOY Change (constant) 13% 8% 21% U.S. 851 U.S. 1,014 Twelve Months ended September Payments Volume 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 year volume information presented has not been updated, as changes made are not material. Payment volumes associated with CyberSource transactions are not included as they do not drive service revenues. Figures may not sum due to rounding. 2009 2010 |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 8 412 165 49 41 20 469 198 62 48 24 United States Asia Pacific Latin America and Caribbean Canada Central and Eastern Europe, Middle East and Africa Quarter ended June US$ in billions, nominal, except percentages Payments Volume Note: Growth rates calculated based on whole numbers, not rounded numbers. From time to time, previously submitted volume information may be updated. Prior year volume information presented has not been updated, as changes made are not material. Constant dollar growth rates exclude the impact of foreign currency fluctuations against the U.S. dollar in measuring performance. YOY Change (nominal) 14% 20% 26% 18% 31% YOY Change (constant) 14% 13% 21% 8% 29% 2009 2010 |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 9 Quarter ended September US$ in billions, nominal, except percentages Payments Volume YOY Change (nominal) 13% 15% 24% 10% 27% YOY Change (constant) 13% 11% 24% 7% 28% 2009 2010 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 year volume information presented has not been updated, as changes made are not material. Payment volumes associated with CyberSource transactions are not included as they do not drive service revenues. Figures may not sum due to rounding. 21 44 55 183 417 27 49 69 211 473 United States Asia Pacific Latin America and Caribbean Canada Central and Eastern Europe, Middle East and Africa |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 10 1,621 636 189 155 78 1,752 771 240 183 91 United States Asia Pacific Latin America and Caribbean Canada Central and Eastern Europe, Middle East and Africa Twelve Months ended June US$ in billions, nominal, except percentages Payments Volume YOY Change (nominal) 8% 21% 27% 18% 17% YOY Change (constant) 8% 11% 18% 6% 13% Note: Growth rates calculated based on whole numbers, not rounded numbers. From time to time, previously submitted volume information may be updated. Prior year volume information presented has not been updated, as changes made are not material. Constant dollar growth rates exclude the impact of foreign currency fluctuations against the U.S. dollar in measuring performance. 2009 2010 |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 11 1,617 656 193 155 77 1,808 800 253 187 97 United States Asia Pacific Latin America and Caribbean Canada Central and Eastern Europe, Middle East and Africa Twelve Months ended September US$ in billions, nominal, except percentages Payments Volume YOY Change (nominal) 12% 22% 31% 21% 29% YOY Change (constant) 12% 12% 20% 7% 24% 2009 2010 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 year volume information presented has not been updated, as changes made are not material. Payment volumes associated with CyberSource transactions are not included as they do not drive service revenues. Figures may not sum due to rounding. |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 12 15,491 10,266 15,855 10,463 17,582 11,721 18,122 12,119 Total Transactions Processed Transactions Total Transactions Processed Transactions Quarter ended June in millions, except percentages Transactions 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 members on their operating certificates. From time to time, previously submitted transaction information may be updated. Prior year transaction information presented has not been updated, as changes made are not material. Quarter ended September Debit 65% Credit 35% Credit 37% Debit 63% Credit 37% Debit 63% Credit 35% Debit 65% YOY Change 13% 14% 14% 16% 2009 2010 |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 13 59,205 39,012 60,573 39,885 45,411 68,423 43,755 66,158 Total Transactions Processed Transactions Total Transactions Processed Transactions Twelve Months ended June in millions, except percentages Transactions 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 members on their operating certificates. From time to time, previously submitted transaction information may be updated. Prior year transaction information presented has not been updated, as changes made are not material. Twelve Months ended September Debit 64% Credit 36% Credit 38% Debit 62% Credit 38% Debit 62% Credit 36% Debit 64% YOY Change 12% 12% 13% 14% 2009 2010 |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 14 791 941 1,732 1,837 1,065 772 Credit Debit Visa Inc. Quarter ended June in millions, except percentages Total Cards YOY Change (2%) 13% 6% Note: From time to time, previously submitted cards information may be updated. Prior year cards information presented has not been updated, as changes made are not material. 2009 2010 |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 15 2,205 (326) 1,879 2,538 (421) 2,117 Revenue – Q4 2010 US$ in millions, except percentages Gross Revenues Incentives Net Operating Revenues YOY Change 15% 29% 13% Note: Growth rates calculated based on whole numbers, not rounded numbers. Fiscal 2009 Fiscal 2010 |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 16 8,145 (1,234) 6,911 9,625 (1,560) 8,065 Revenue – Fiscal Year 2010 US$ in millions, except percentages Gross Revenues Incentives Net Operating Revenues YOY Change 18% 26% 17% Note: Growth rates calculated based on whole numbers, not rounded numbers. Fiscal 2009 Fiscal 2010 |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 17 Revenue Detail – Q4 2010 US$ in millions, except percentages Service Revenues Data Processing Revenues International Transaction Revenues Other Revenues 808 727 507 163 912 840 619 167 YOY Change 13% 15% 22% 3% Note: Growth rates calculated based on whole numbers, not rounded numbers. Fiscal 2009 Fiscal 2010 |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 18 Revenue Detail – Fiscal Year 2010 US$ in millions, except percentages Service Revenues Data Processing Revenues International Transaction Revenues Other Revenues 3,174 2,430 1,916 625 3,497 3,125 2,290 713 YOY Change 10% 29% 20% 14% Note: Growth rates calculated based on whole numbers, not rounded numbers. Fiscal 2009 Fiscal 2010 |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 19 Operating Margin – Q4 2010 US$ in millions, except percentages 1,879 1,010 869 2,117 1,004 1,113 Net Operating Revenues Total Operating Expenses Operating Income YOY Change 7 ppts 13% – 28% Note: Growth rates calculated based on whole numbers, not rounded numbers. Fiscal 2009 Fiscal 2010 46% 53% Operating Margin |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 20 Operating Margin – Fiscal Year 2010 US$ in millions, except percentages 6,911 3,373 3,538 8,065 3,476 4,589 Net Operating Revenues Total Operating Expenses Operating Income 51% 57% Operating Margin YOY Change 6 ppts 17% 3% 30% Note: Growth rates calculated based on whole numbers, not rounded numbers. Fiscal 2009 Fiscal 2010 |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 21 355 111 283 86 61 113 1 353 119 233 108 78 117 (4) Operating Expenses – Q4 2010 US$ in millions, except percentages Personnel Network, EDP and Communications Advertising, Marketing and Promotion Professional and Consulting Fees Depreciation and Amortization Administrative and Other Litigation Provision YOY Change (1%) 8% (17%) 26% 28% 5% NM Note: Growth rates calculated based on whole numbers, not rounded numbers. Fiscal 2009 Fiscal 2010 |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 22 1,228 393 918 268 226 338 2 1,222 425 964 286 265 359 (45) Operating Expenses – Fiscal Year 2010 US$ in millions, except percentages Personnel Network, EDP and Communications Advertising, Marketing and Promotion Professional and Consulting Fees Depreciation and Amortization Administrative and Other Litigation Provision YOY Change (1%) 8% 5% 7% 17% 7% NM Note: Growth rates calculated based on whole numbers, not rounded numbers. Fiscal 2009 Fiscal 2010 |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 23 Other Financial Results • Cash, cash equivalents, restricted cash and available-for-sale investment securities of $6.0 billion at the end of the fiscal year, which includes $1.9 billion of restricted cash for litigation escrow • Total free cash flow of $3.4 billion for FY10 and adjusted free cash flow of $961 million after the CyberSource acquisition and the Retailers’ litigation prepayment • Capital expenditures of $97 million and $241 million during the fiscal fourth quarter and full-year 2010, respectively Note: See appendix for reconciliation of adjusted non-GAAP measures to the closest comparable GAAP measures. |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 24 Less than $900 million Advertising, marketing and promotion expenses Financial Metrics for Fiscal Year 2011 Annual operating margin About 60% 16% to 16.5% range Volume and support incentives as % of gross revenues Annual net revenue growth 11% to 15% range |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results 25 Financial Metrics for Fiscal Year 2011 Capital expenditures Between $250 - $275 million Annual diluted class A common stock earnings per share growth 20% + GAAP tax rate 36.5% to 37% range Annual free cash flow $3 billion + |
Appendix Reconciliation of Non-GAAP Measures |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results Adjusted Net Income and Earnings US$ in millions, except per share data Management believes the presentation of adjusted net income and diluted earnings per share provides a clearer understanding of our operating performance for the periods. The revaluation of the Put option resulted in non-cash, non- operating income during the three months ended September 30, 2010. The reduction in value was primarily the result of declines in Visa’s price-to-earnings ratio in the second half of fiscal 2010 and does not reflect any change in the likelihood that Visa Europe will exercise its option. Management therefore believes that the resulting non-operating income is not indicative of Visa’s performance in the current or future periods. A1 Three Months Ended September 30, 2010 Twelve Months Ended September 30, 2010 Net income attributable to Visa Inc. (as reported) 774 $ 2,966 $ Revaluation of Visa Europe Put option (1) (79) (79) Adjusted net income attributable to Visa Inc. 695 $ 2,887 $ Weighted average number of diluted shares outstanding (as reported) 731 739 Adjusted diluted earnings per share 0.95 $ 3.91 $ (1) Non-cash, non-operating income resulting from the revaluation is not subject to tax. |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results Impact of CyberSource Acquisition US$ in millions, except per share data The following table presents the impact of the CyberSource acquisition on Visa’s diluted earnings per share. A2 Three Months Ended September 30, 2010 Twelve Months Ended September 30, 2010 Net income attributable to Visa Inc. (as reported) 774 $ 2,966 $ Taxable CyberSource adjustments: Less: Operating revenue (1) (41) (41) Addback: Operating expenses (2) 48 49 Subtotal of taxable adjustments 7 8 Tax rate (3) 40% 40% Tax impact of adjustments (3) (3) After tax impact of taxable CyberSource adjustments 4 5 Addback: non-deductible adjustments (4) 12 17 Impact of CyberSource 16 22 Adjusted net income attributable to Visa Inc. 790 $ 2,988 $ Weighted average number of diluted shares outstanding (as reported) 731 739 Adjusted diluted earnings per share 1.08 $ 4.04 $ Diluted earnings per share (as reported) 1.06 $ 4.01 $ Impact of CyberSource acquisition (0.02) $ (0.03) $ (1) (2) (3) Represents a normalized rate of 40%. (4) Operating revenues recognized by Visa related to CyberSource transactions since the acquisition in July 2010. Amount primarily represents data processing revenues. Operating expenses incurred by Visa related to CyberSource. Amounts incurred prior to the acquisition primarily represent integration and deal related costs. Amounts incurred subsequent to the acquisition primarily represent personnel, amortization of intangibles and normal operating expenses. Amount primarily represents professional fees related to closing the transaction as well as some minor stock compensation expense, which are non-deductible for tax purposes. |
Fiscal Fourth Quarter and Full-Year 2010 Financial Results Calculation of Free Cash Flow US$ in millions A3 (1) Includes changes in volume & support incentives, trade receivables, settlement receivable/payable, and personnel incentives. Additions (+) / Reductions (-) to Net income attributable to Visa Inc. Net income attributable to Visa Inc. (as reported) 774 2,966 Capital Assets + Depreciation and amortization 78 265 - Capital expenditures (97) (19) (241) 24 Litigation + Litigation provision (4) (45) + Accretion expense 4 27 - Settlement payments (105) (320) + Settlement payments funded by litigation escrow 70 (35) 280 (58) Share-based Compensation + Share-based compensation 36 131 Pension + Pension expense 8 39 - Pension contribution (66) (58) (66) (27) Taxes + Income tax expense 422 1,674 - Income taxes paid (314) 108 (1,291) 383 Visa Europe Put Option - Fair value adjustment (79) (79) Changes in Working Capital (1) +/- Changes in other working capital accounts 133 108 Total Free Cash Flow 860 3,448 Less: Retailers' Litigation Prepayment - Settlement payment - (682) Less: CyberSource Acquisition - Purchase consideration, net (1,805) (1,805) Adjusted Free Cash Flow (945) 961 Twelve Months Ended September 30, 2010 Three Months Ended September 30, 2010 |