8/12/2019
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`Payments Volume Growth Boosts Visa's 2018 Earnings; Key Initiatives To Drive Future Value
`
`1,230 views | Oct 29, 2018, 09:40am
`
`Payments Volume Growth Boosts
`Visa's 2018 Earnings; Key Initiatives To
`Drive Future Value
`
`Trefis Team Contributor
`Great Speculations Contributor Group
`Markets
`
`Visa (NYSE: V), the US-based financial services
`company, reported a solid financial performance
`for its fourth quarter and fiscal year 2018, with its
`revenue rising 12% on the back of global payment
`volumes growth. The company’s adjusted earnings
`came in at $1.21 per share, 34% higher on a year-
`on-year basis, beating the consensus estimate by
`$0.01 per share. Accordingly, the company’s stock
`jumped almost 4.6% and is currently trading at
`$140 per share. For fiscal 2019, the company
`expects its overall revenue to grow in low double-
`digits while its adjusted operating expense are likely to grow in the mid-to-high single-
`digit range. We expect the company’s key initiatives such as Visa Direct, contact-less
`cards, and digital solutions to drive its value in the coming years.
`
`An Indian women purchases fabric inside a
`shop in Gauhati, India, Tuesday, Oct. 16, 2018.
`Global credit card and payments companies
`like American Express, Visa and MasterCard are
`facing a challenge in meeting a requirement to
`store transaction data for all Indian customers
`within the country. (AP Photo/Anupam Nath)
`
`We currently have a price estimate of $145 per share for Visa, which is higher than
`its market price. You can view our interactive dashboard – Visa’s 2019 Price Estimate
`and alter the key drivers to visualize the impact on its valuation.
`
`https://www.forbes.com/sites/greatspeculations/2018/10/29/payments-volume-growth-boosts-visas-2018-earnings-key-initiatives-to-drive-future-value/… 1/4
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`VISA - EXHIBIT 1020
`Visa Inc. et al. v. Universal Secure Registry LLC
`IPR2018-01350
`
`

`

`8/12/2019
`
`Payments Volume Growth Boosts Visa's 2018 Earnings; Key Initiatives To Drive Future Value
`
`TREFIS
`
`Key Highlights Of 4Q’18 Results
`
`Visa’s 4Q revenue grew by 12% due to robust growth in payment volume backed by
`the strengthening US economy, partially offset by a slowdown in dual-branded
`card volume in China. The full year revenue stood at $20.6 billion, 12% higher
`compared to the last year.
`In fiscal 2018, Visa’s number of cards (including virtual cards) increased by about
`80 million to 3.3 billion. The total volume surpassed a record $11 trillion, driven by
`182 billion transactions during the year. The company’s payments volume growth
`remained strong across the globe, with double-digit growth (in constant dollars) in
`all regions except Europe.
`Cross-border revenue (on a constant dollar basis) rose 10% on a year-on-year
`basis, driven by processed transaction growth during the quarter.
`As expected, the company’s adjusted EPS showed a strong improvement and grew
`34% to $1.21 per share, higher than the company’s guidance. The earnings growth
`was driven by lower tax expense due to the US Tax Reform, which was slightly
`offset by the exchange rate fluctuations. For the full year, the adjusted earnings
`were $4.61 per share, up 32% on a y-o-y basis.
`During the quarter, Visa returned roughly $2.1 billion to its shareholders in the
`form of share repurchases ($1.6 billion) and dividends ($500 million). For the full
`year, the company repurchased shares worth $7.2 billion, and paid $1.9 billion in
`dividends. In addition, the company’s Board authorized an increase of 19% in its
`quarterly dividend to $0.25 per share per quarter.
`
`Going Forward
`
`https://www.forbes.com/sites/greatspeculations/2018/10/29/payments-volume-growth-boosts-visas-2018-earnings-key-initiatives-to-drive-future-value/… 2/4
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`8/12/2019
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`Payments Volume Growth Boosts Visa's 2018 Earnings; Key Initiatives To Drive Future Value
`Overall, Visa expects its net revenue to grow in low double-digit (nominal basis) in
`fiscal year 2019. The company expects the macro-economic environment in its key
`markets to remain strong, which will continue to drive double-digit payment
`volume growth for the company in fiscal 2019.
`The company anticipates growth rates in North America to slow down in the
`second half of of 2019. International payments volume growth is forecast to remain
`strong and stable, with market share gains in several markets likely to be offset by
`slowing dual-brand issuance in China.
`Visa’s cross-border growth will be highly dependent on exchange rates, geopolitica
`factors, and macroeconomic shifts in fiscal 2019. Assuming no significant changes
`in the current environment, the company forecasts a double-digit growth in its
`cross-border revenue as well. Processed transaction growth is expected to be
`steady in fiscal 2019.
`Client incentives are expected to be in the range of 22% to 23% of the gross
`revenue. The higher proportion of client incentives will be driven by the full-year
`impact of renewals and new deals signed in fiscal 2018 and anticipated in fiscal
`2019.
`Visa expects its 2019 adjusted operating expense growth to be in the mid-to-high
`single-digit range. This includes a 1.5-2.0 percentage point impact from adopting
`the new accounting standard. Also, the company projects its 2019 tax rate to be in
`the 20% to 20.5% range.
`Visa’s capital spending for fiscal 2019 is estimated to be around $800 million,
`which includes capital associated with hardware, support growth, resiliency and
`cybersecurity, and an upgrade of its data center in the UK. Moreover, the company
`anticipates returning at least $11 billion to shareholders via dividends and stock
`buybacks.
`The company is building upon Visa Direct’s unique reach by rapidly scaling
`solutions through use case expansion and large platform enablement. For instance
`the company signed new partnerships with a couple of insurance companies to
`enable more real-time disbursements to their customers. We expect Visa Direct
`and its associated partnerships to be one of the key drivers of the company’s long
`term growth.
`
`https://www.forbes.com/sites/greatspeculations/2018/10/29/payments-volume-growth-boosts-visas-2018-earnings-key-initiatives-to-drive-future-value/… 3/4
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`

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`8/12/2019
`
`Payments Volume Growth Boosts Visa's 2018 Earnings; Key Initiatives To Drive Future Value
`In addition, Visa aims to penetrate further in the domestic as well as international
`contact-less card market. The company expects to issue 100 million Visa contact-
`less cards in the US markets by end of 2019. This is likely to boost the company’s
`volume growth in the long term.
`Further, Visa has renewed its contract to be the sponsor of the next four Olympic
`Games to be held at Tokyo, Beijing, Paris, and Los Angeles through 2032. Since
`Olympic Games are the world’s largest sporting event, they will enable Visa to
`promote its brand at a regional and global level while showcasing product
`innovation and launching new business initiatives to boost its top-line and overall
`value.
`
`Overall, fiscal 2018 was a great year for Visa as the company delivered strong financial
`performance driven by growth in global payment volumes. The company’s key initiatives
`such as Visa Direct, contact-less cards, and digital solutions are likely to drive its value in
`the coming years.
`
`
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