Visa : Q3 2020 Presentation

July 28, 2020 at 04:15 pm EDT

Visa Inc.

Fiscal Third Quarter 2020

Financial Results

July 28, 2020

Fiscal Third Quarter 2020 Results

					Diluted Class A
	Net	Client Incentives			Common Stock
	as a % of	Operating	Effective Tax	Earnings Per
YoY Increase / (Decrease)	Revenues	Gross Revenue	Expense	Rate	Share
GAAP Nominal-Dollar Basis			(5%)	19.1%	(22%)
Non-GAAPNominal-Dollar	(17%)	23.8%
		(5%)	19.0%	(23%)
Basis(1)

Foreign Currency Impact	~0.5%		~0.5%		~1%
Acquisition Impact	(~0.5%)	0.1%	(~2.5%)	0%	~0.5%
Adjusted Constant-Dollar	(17%)	23.9%	(7%)	19.0%	(21%)
Basis(2)

Non-GAAPresults exclude equity investment gains and losses, amortization of acquired intangible assets for acquisitions in fiscal year 2019 and subsequent periods, and non-recurringacquisition-related costs.
Adjusted financial results are on a constant-dollar basis and exclude the impact of the non-GAAP items and operating revenues and expenses of the acquired entities that were not in the entire quarter of the previous year and the incremental interest expense or forgone interest income as a result of funding the acquisition through debt or cash, respectively. Adjusted diluted class A common stock earnings per share growth is derived from adjusted third quarter 2019 earnings per share results of $1.37, which excludes $9 million of net equity investment gains and $5 million related to the amortization of acquired intangible assets and non-recurringacquisition-related costs.

Note: Refer to the Adjusted Constant-Dollar Results Footnote for further information.

1 Fiscal Third Quarter 2020 Financial Results

Non-GAAP and Adjusted Constant-Dollar Results Footnote

We consider the non-GAAP measures useful to investors because they provide greater transparency into management´s view and assessment of the Company´s ongoing operating performance by removing items management believes are not representative of our continuing operations and may distort our longer-term operating trends. We believe these measures to be useful to enhance the comparability of our results from period to period and with our competitors, as well as to show ongoing results from operations distinct from items that are infrequent or not associated with the Company´s core operations. The Company does not, nor does it suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information.

We exclude the following to arrive at our Adjusted Constant-Dollar Financial Results:

• non-GAAP impacts of (refer to the financial tables in the earnings release for further details):

• special items;

• equity investment gains and losses;

• amortization of acquired intangible assets for acquisitions in fiscal year 2019 and subsequent periods;

• non-recurringacquisition-related costs;

• impact of foreign currency to provide currency-neutral growth rates which management believes are a better reflection of the underlying performance of our business; and

• impact of acquisitions, which include operating revenues and expenses of the acquired entities that were not in the entire quarter of the previous year and the incremental interest expense or forgone interest income as a result of funding the acquisition through debt or cash, respectively, which management believes enhances the comparability of our results. These amounts will be adjusted until we lap the quarter that the entity was acquired in, at which time there will be comparable results within each reported period.

2 Fiscal Third Quarter 2020 Financial Results

Fiscal Third Quarter 2020 Results

While the underlying business drivers declined year-over-year due to the continuing impact of COVID-19, they improved each month throughout the quarter - meaningfully for payments volume and processed transactions and marginally for cross-border volume
Returned $1.6B of capital to shareholders in the form of share repurchases and dividends

		GAAP		Non-GAAP(1)
in billions, except percentages and per	USD	YoY Change	USD		YoY Change
share data

Net Revenues	$4.8	(17%)	$4.8		(17%)

Net Income	$2.4	(23%)	$2.3		(24%)

Earnings Per Share	$1.07	(22%)	$1.06		(23%)

Non-GAAPresults exclude equity investment gains and losses, amortization of acquired intangible assets and non-recurringacquisition-related costs.

Q3 2020 Key Business Drivers

(YoY increase / (decrease), volume in constant dollars)

Payments Volume	Cross-Border Volume	Processed Transactions

(10%)	Excluding Intra-Europe(1): (47%)	(13%)
	Total: (37%)

Cross-bordervolume excluding transactions within Europe.

3 Fiscal Third Quarter 2020 Financial Results

Operational Performance Metrics Weekly Summary

U.S. Payments Volume Results

						Total				Credit						Debit
30%
20%
10%
0%

(10%)
(20%)
(30%)
(40%)				April					May					June					July


7	14	21	28	5	12	19	26	2	9	16	23	30	7	14	21
										Week Ended
					Total				Card Present				Card Not Present				Card Not Present,
50%																		Excluding Travel

30%

10%

(10%)

(30%)

(50%)

		April					May					June				July

7	14	21	28	5	12	19	26	2	9	16	23	30	7	14	21
								Week Ended

Note: Results are calculated over the comparable prior-year period. Refer to Operational Performance Data footnote for further information on these metrics.

4 Fiscal Third Quarter 2020 Financial Results

Operational Performance Metrics Weekly Summary

Processed Transactions Results

(5%)

(10%)

(15%)

(20%)

(25%)

(30%)

		April				May				June				July

7	14	21	28	5	12	19	26	2	9	16	23	30	7	14	21

							Week Ended

Note: Results are calculated over the comparable prior-year period. Refer to Operational Performance Data footnote for further information on these metrics.

5 Fiscal Third Quarter 2020 Financial Results

Operational Performance Metrics Weekly Summary

Cross-Border Volume Results (Constant Dollar)

Excluding Intra-Europe

Total

(10%)

(20%)

(30%)

(40%)

(50%)

(60%)

		April				May				June				July

7	14	21	28	5	12	19	26	2	9	16	23	30	7	14	21

							Week Ended
	Cross-Border Volume Excluding Intra-Europe Results (Constant Dollar)
		Total			Card Present +			Card Not Present			Card Not Present,
					Card Not Present Travel							Excluding Travel

40%

20%

(20%)

(40%)

(60%)

(80%)

(100%)

		April					May					June				July

7	14	21	28	5	12	19	26	2	9	16	23	30	7	14	21
								Week Ended

Note: Results are calculated over the comparable prior-year period. Refer to Operational Performance Data footnote for further information on these metrics.

6 Fiscal Third Quarter 2020 Financial Results

Operational Performance Metrics Monthly Summary

U.S. Payments Volume Results

Total

Credit

Debit

30%

20%

10%

(10%)

(20%)

(30%)

Jan	Feb	Mar	Apr	May	Jun	Jul
						1-21

Total	Card Present	Card Not Present	Card Not Present,
50%			Excluding Travel

30%

10%

(10%)

(30%)

(50%)

Jan	Feb	Mar	Apr	May	Jun	Jul
						1-21

Note: Results are calculated over the comparable prior-year period. Refer to Operational Performance Data footnote for further information on these metrics.

7 Fiscal Third Quarter 2020 Financial Results

Operational Performance Metrics Monthly Summary

Processed Transactions Results

20%

10%

(10%)

(20%)

(30%)

Jan	Feb	Mar	Apr	May	Jun	Jul
						1-21

Note: Results are calculated over the comparable prior-year period. Refer to Operational Performance Data footnote for further information on these metrics.

8 Fiscal Third Quarter 2020 Financial Results

Operational Performance Metrics Monthly Summary

Cross-Border Volume Results (Constant Dollar)

Excluding Intra-Europe

Total

10%

(10%)

(20%)

(30%)

(40%)

(50%)

(60%)

Jan	Feb	Mar	Apr	May	Jun	Jul
						1-21

Cross-Border Volume Excluding Intra-Europe Results (Constant Dollar)

Total	Card Present +	Card Not Present	Card Not Present,
	Card Not Present Travel		Excluding Travel

40%

20%

(20%)

(40%)

(60%)

(80%)

(100%)

Jan	Feb	Mar	Apr	May	Jun	Jul
						1-21

Note: Results are calculated over the comparable prior-year period. Refer to Operational Performance Data footnote for further information on these metrics.

9 Fiscal Third Quarter 2020 Financial Results

Payments Volume Results

Q3 FY2020

Nominal

		Constant
Visa Inc.	Credit	Debit
		3%

(0%)

(10%)

(12%)

(20%)

(22%)

Nominal USD (in billions)	$417	$532
U.S.	$949
International	$1,004	$529	$475
Total	$1,953	$946	$1,007
Note: The chart results are calculated over the comparable prior-year period. Refer to Operational Performance Data footnote for further information on these metrics.
10 Fiscal Third Quarter 2020 Financial Results		©2020 Visa. All rights reserved.

Payments Volume Results

Q2 FY2020

Nominal

Constant

Visa Inc.

Credit

Debit

			(0%)
		(2%)
Nominal USD (in billions)	$492	$491
U.S.	$983
International	$1,147	$624	$523
Total	$2,130	$1,116	$1,014

Note: The chart results are calculated over the comparable prior-year period. Refer to Operational Performance Data footnote for further information on these metrics.

11 Fiscal Third Quarter 2020 Financial Results

Transactions and Cross-Border Volume Results

Q3 FY2020

	Transactions			Cross-Border	Constant

					(excluding
Total	Payment	Processed	Nominal	Constant	Intra-Europe)(1)

	38%
(14%)	(12%)	(13%)

Debit

62%

(38%)(37%)

(47%)

Transaction Count (in millions)
Credit	14,364	14,223
Debit	30,071	26,456
Total	44,435	40,679	30,676

(1) Cross-border volume excluding transactions within Europe.

Note: The chart results are calculated over the comparable prior-year period. Refer to Operational Performance Data footnote for further information on these metrics.

12 Fiscal Third Quarter 2020 Financial Results

Total Cards

(in millions)	2019
Q2 FY2020	2020

3,376	3,469

2,255 2,328

1,121 1,141

	Total Visa Inc.	Credit	Debit
YoY Change	3%	2%	3%

Note: The chart results are calculated over the comparable prior-year period. Refer to Operational Performance Data footnote for further information on these metrics.

13 Fiscal Third Quarter 2020 Financial Results

Revenue Results

Q3 FY2020

Reported Adjusted

(2%)

(5%)

(8%)

(14%)

(17%) (17%)

(44%)

Service	Data Processing	International	Other	Gross	Client	Net
Revenues	Revenues	Transaction	Revenues	Revenues	Incentives	Revenues
Reported		Revenues
		$314
Nominal USD $2,409	$2,525	$1,102	$6,350	$1,513	$4,837
(in millions)
Client Incentives %					23.8%
of Gross Revenues

14 Fiscal Third Quarter 2020 Financial Results

Operating Expense Results

Q3 FY2020

Reported

Non-GAAP

Adjusted

19%

13%

8% 8%

(7%)	(7%)	(5%) (5%) (7%)
	(16%)(14%)	(18%)
	(18%)

(38%)(38%)	(40%)(40%)

	Personnel	Marketing	Network &	Professional	Depreciation &	General &	Litigation	Total
	Operating
			Processing	Fees	Amortization	Administrative	Provision
			Expenses

Reported	$941	$174	$172	$95	$197	$258	$1	$1,838
Nominal USD
(in millions)

Note: The chart results are calculated over the comparable prior-year period. Refer to the Adjusted Constant-Dollar Results Footnote for further information on adjusted results. Percentage changes are calculated based on unrounded numbers. Refer to the financial tables in the earnings release for further details and a reconciliation of the non-GAAP measures presented.

15 Fiscal Third Quarter 2020 Financial Results

Other Financial Results and Highlights

COVID-19continues to have an impact globally. In the fiscal third quarter we saw spending improve each month as most countries began to relax domestic restrictions. In the U.S., as the quarter progressed, payments volume meaningfully improved, driven by the relaxing of shelter-in-place restrictions in a number of states. This helped to lift card present spending while eCommerce excluding travel spend remained consistently elevated, as consumers continued to shift their spend online. International markets are at various stages of reopening and recovery, with many large markets having a trajectory comparable to the U.S. Global processed transaction growth has slightly lagged payments volume growth, as the mix of spending shifted away from smaller purchases. Cross-border volume has improved only marginally through the quarter as travel has been heavily affected by most country borders remaining closed, partially offset by strong eCommerce spend excluding travel.
On April 2, 2020 Visa issued fixed-rate senior notes in an aggregate principal amount of $4.0 billion, with maturities ranging between 7 and 20 years, and interest rates from 1.9% to 2.7%. The weighted average interest rate is 2.16%. The net proceeds will be used for general corporate purposes.

16 Fiscal Third Quarter 2020 Financial Results

Operational Performance Data Footnote

Current quarter payments volume and other select metrics are provided in the operational performance data supplement in the earnings release to provide more recent operating data. Service revenues continue to be recognized based on payments volume in the prior quarter.

Total transactions represent payments and cash transactions as reported by Visa clients on their operating certificates. Processed transactions represent transactions involving cards and other form factors carrying the Visa, Visa Electron, Interlink, V PAY and PLUS cards processed on Visa's networks.

On occasion, reported payments volume, transaction and card information may be updated to reflect revised client submissions or other adjustments. Prior-period updates, other than the change to the payments volume definition, are not material. Figures may not recalculate exactly due to rounding. Percentage changes and totals are calculated based on unrounded numbers. Constant-dollar growth rates exclude the impact of foreign currency fluctuations against the U.S. dollar in measuring performance.

17 Fiscal Third Quarter 2020 Financial Results

Free Cash Flow

(USD in millions)

The Company had cash, cash equivalents and investment securities of $17.2 billion as of June 30, 2020.

Calculation of Free Cash Flow	Q3 FY2020 QTD	Q3 FY2020 YTD

Net cash provided by operating activities	$3,002	$8,344

Less: capital expenditures	(161)	(568)

Free Cash Flow(1)	$2,841	$7,776

Free Cash Flow is cash provided by operating activities adjusted to reflect capital investments made in the business

Cash Returned to Shareholders	Q3 FY2020 QTD	Q3 FY2020 YTD

Stock Repurchases	$933	$6,486

Dividends	$663	$2,002

Note: Management believes that this presentation is useful to measure Visa's generation of cash available to first re-invest in the business, and then return excess cash to shareholders through stock repurchases and cash dividends.

18 Fiscal Third Quarter 2020 Financial Results

Forward-Looking Statements

This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that relate to, among other things, the impact on our underlying business drivers and other volume and transaction trends as a result of COVID-19, our future operations, prospects, developments, strategies and business growth. Forward-looking statements generally are identified by words such as "anticipates," "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:

impact of global economic, political, market, health and social events or conditions, including the impact of COVID-19;
increased oversight and regulation of the global payments industry and our business;
impact of government-imposed restrictions on international payment systems;
outcome of tax, litigation and governmental investigation 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;
exposure to loss or illiquidity due to settlement guarantees;
uncertainty surrounding the impact of the United Kingdom's withdrawal from the European Union;
a disruption, failure, breach or cyber-attack of our networks or systems;
risks, uncertainties and the failure to achieve the anticipated benefits with respect to 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, 2019, 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.

19 Fiscal Third Quarter 2020 Financial Results

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Visa Inc. published this content on 28 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 July 2020 20:15:05 UTC

Market Closed - Nyse Other stock markets 04:00:02 2024-04-24 pm EDT			5-day change	1st Jan Change
275 ^USD	+0.32%		+0.85%	+5.63%

12:27pm	DZ Bank Adjusts Price Target on Visa to $340 From $326	MT
Apr. 24	Argus Raises Visa's Price Target to $310 From $300	MT

DZ Bank Adjusts Price Target on Visa to $340 From $326	06:27am	MT
Argus Raises Visa's Price Target to $310 From $300	Apr. 24	MT
Global markets live: Heineken, AT&T Hasbro, Visa, Boeing...	Apr. 24
Nasdaq outshines Wall St peers on tech boost, earnings glee	Apr. 24	RE
UBS Adjusts Price Target on Visa to $325 From $315, Maintains Buy Rating	Apr. 24	MT
Fubon Adjusts Price Target on Visa to $318 From $317	Apr. 24	MT
The return of bad news is good news	Apr. 24
Macquarie Adjusts Price Target on Visa to $300 From $290	Apr. 24	MT
Oppenheimer Adjusts Visa Price Target to $299 From $297, Maintains Outperform Rating	Apr. 24	MT
RBC Raises Price Target on Visa to $315 From $309, Cites 'Durable Growth,' Keeps Outperform Rating	Apr. 24	MT
Nasdaq, S&P futures advance on tech boost, earnings glee	Apr. 24	RE
Bernstein Adjusts Visa's Price Target to $310 From $304	Apr. 24	MT
Wedbush Lifts Price Target on Visa to $300 From $280, Cites Stronger-Than-Expected Fiscal Q2, Keeps Outperform Rating	Apr. 24	MT
Visa Stock Gains on Fiscal Second-Quarter Beat	Apr. 24	MT
Citigroup Adjusts Visa's Price Target to $321 From $314, Keeps Buy Rating	Apr. 24	MT
S&P, Nasdaq futures advance on tech boost, earnings cheer	Apr. 24	RE
Goldman Sachs Adjusts Visa's Price Target to $335 From $328, Keeps Buy Rating	Apr. 24	MT
Visa: 20% EPS growth in Q2	Apr. 24	CF
Visa Says Continue To See Strong International Travel Volumes - Conference	Apr. 23	RE
Transcript : Visa Inc., Q2 2024 Earnings Call, Apr 23, 2024	Apr. 23
Visa 2Q Revenue Climbs as Payments Volume Grows	Apr. 23	DJ
Visa Fiscal Q2 Non-GAAP EPS, Net Revenue Increase; Declares Dividend	Apr. 23	MT
Visa Posts Fiscal Q2 Non-GAAP EPS of $2.51 on Net Revenue of $8.78 Billion	Apr. 23	MT
Visa results beat expectations on strong consumer spending trends	Apr. 23	RE
Visa Inc. Reports Earnings Results for the Second Quarter and Six Months Ended March 31, 2024	Apr. 23	CI

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