Visa Inc. reports 10.0% Net Income decline in 2020 and 4.9% Revenue decline
10/28/2020 • About Visa Inc. (
$V) • By InTwits
Visa Inc. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Visa Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.5%. At the same time it's a lot of higher than industry average of 5.5%.
- CAPEX is quite volatile: $463m in FY2020, $432m in FY2019, $635m in FY2018, $1,069m in FY2017, $723m in FY2016
- The company has highly profitable business model: ROIC is 23.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 4.9%. Revenue decline showed acceleration in FY20Q4 - it was 16.9% YoY. During the last 5 years Revenue growth topped in FY2017 at 21.7% and was decelerating since that time. EBITDA Margin showed almost no change in FY2020.
SG&A as a % of Revenue decreased slightly on 0.55 pp from 10.0% to 9.5% in FY2020. SG&A as a % of Revenue stuck to a declining trend at -0.39 pp per annum in the last 5 years.
Net Income margin decreased on 2.8 pp from 52.6% to 49.7% in FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 3.4%. The company showed almost no change in CAPEX/Revenue from FY2017 to FY2020. For the last three years the average CAPEX/Revenue was 3.4%.
Return on investment
The company operates at high and attractive ROIC (23.2%) and ROE (36.0%). ROIC decreased on 3.9 pp from 27.2% to 23.2% in FY2020. ROE decreased on 5.8 pp from 41.8% to 36.0% in FY2020. During the last 5 years ROIC topped in FY2019 at 27.2%. During the last 5 years ROE topped in FY2019 at 41.8%.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.6x and Debt / EBITDA is 1.7x. Net Debt / EBITDA decreased slightly on 0.0059x from 0.6x to 0.6x in FY2020. Debt surged on 47.6% while cash jumped on 108%. Net Debt/EBITDA followed a declining trend in the last 5 years.
Visa Inc. has no short term refinancing risk: cash is higher than short term debt (524.3%).
Valuation and dividends
The company's trades at EV/EBITDA 22.4x and P/E 30.0x.
Management team
Alfred F Kelly Jr "Al" is a the company's CEO. Alfred F Kelly Jr "Al" has spent 4 years with the company. The company's CFO is Vasant M Prabhu. Vasant M Prabhu has 6 years tenure at the company.
Financial and operational results
FY ended 09/30/2020
Visa Inc. ($V) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 15,082 | 18,358 | 20,609 | 22,977 | 21,846 | -4.9% |
| SG&A | 1,665 | 1,982 | 2,133 | 2,301 | 2,067 | -10.2% |
| EBITDA | 8,385 | 12,700 | 13,567 | 15,657 | 14,962 | -4.4% |
| EBIT | 7,883 | 12,144 | 12,954 | | | |
| Interest expence | 427 | 563 | 612 | | | |
| Tax | 2,021 | 4,995 | 2,505 | | | |
| Net Income | 5,991 | 6,699 | 10,301 | 12,080 | 10,866 | -10.0% |
| Stock Based Compensation | 158 | 235 | 327 | | | |
Balance Sheet
|
|---|
| Cash | 5,619 | 9,874 | 8,162 | 7,838 | 16,289 | 107.8% |
| Accounts Receivable | 1,041 | 1,132 | 1,208 | | | |
| Accounts Payable | 203 | 179 | 183 | | | |
| Short Term Debt | 0 | 1,749 | 0 | 0 | 3,107 | |
| Long Term Debt | 15,882 | 16,618 | 16,630 | 16,729 | 21,590 | 29.1% |
Cash flow
|
|---|
| Capex | 523 | 707 | 718 | 756 | 736 | -2.6% |
| Dividends | 1,350 | 1,579 | 1,918 | | | |
| Acquisitions | 9,082 | 302 | 196 | | | |
Ratios
|
|---|
| Revenue growth | 8.7% | 21.7% | 12.3% | 11.5% | -4.9% | |
| EBITDA growth | -12.3% | 51.5% | 6.8% | 15.4% | -4.4% | |
|
|---|
| EBITDA Margin | 55.6% | 69.2% | 65.8% | 68.1% | 68.5% | 0.3% |
| EBIT Margin | 52.3% | 66.2% | 62.9% | | |
| SG&A, % of revenue | 11.0% | 10.8% | 10.3% | 10.0% | 9.5% | -0.6% |
| SBC, % of revenue | 1.0% | 1.3% | 1.6% | | |
| Net Income Margin | 39.7% | 36.5% | 50.0% | 52.6% | 49.7% | -2.8% |
| CAPEX, % of revenue | 3.5% | 3.9% | 3.5% | 3.3% | 3.4% | 0.1% |
|
|---|
| ROIC | 18.1% | 21.9% | 23.0% | 27.2% | 23.2% | -3.9% |
| ROE | 21.0% | 24.6% | 36.9% | 41.8% | 36.0% | -5.8% |
| Net Debt/EBITDA | 1.2x | 0.7x | 0.6x | 0.6x | 0.6x | -0.0x |
| Interest expence / Average debt | 2.7% | 3.3% | 3.5% | | | |
People
|
|---|
| Insider ownership | 0.1% | 0.1% | 0.1% | | | |
Visa Inc. ($V) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 6,054 | 5,854 | 4,837 | 5,101 | | 10.0% | 6.6% | -17.2% | -16.9% |
| EBITDA | 4,224 | 4,145 | 3,225 | 3,368 | | 9.0% | 9.1% | -20.8% | -13.8% |
| Net Income | 3,272 | 3,084 | 2,373 | 2,137 | | 9.9% | 3.6% | -23.5% | -29.4% |
Balance Sheet
|
|---|
| Cash | 8,768 | 9,740 | 13,898 | 16,289 | | 5.8% | 27.4% | 75.7% | 107.8% |
| Short Term Debt | 3,082 | 4,047 | 3,028 | 3,107 | | - | - | - | - |
| Long Term Debt | 14,180 | 14,432 | 18,411 | 21,590 | | -14.7% | -13.2% | 10.3% | 29.1% |
Ratios
|
|---|
| EBITDA Margin | 69.8% | 70.8% | 66.7% | 66.0% | | -0.6% | 1.6% | -3.1% | 2.4% |
| Net Income Margin | 54.0% | 52.7% | 49.1% | 41.9% | | -0.0% | -1.5% | -4.0% | -7.4% |
Peers in Data Processing & Outsourced Services
Below you can find Visa Inc. benchmarking vs. other companies in Data Processing & Outsourced Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Square, Inc. ($SQ) | - | 29.6% | 49.0% | 42.9% | 101.5% |
| Global Payments Inc. ($GPN) | - | 37.2% | -15.3% | 45.9% | 51.1% |
| Fiserv, Inc. ($FISV) | - | 3.5% | 2.2% | 74.9% | 45.8% |
| NIC Inc. ($EGOV) | - | 5.8% | 2.5% | 2.7% | 30.0% |
| StoneCo Ltd ($STNE) | - | 74.3% | 106.0% | 63.1% | 28.9% |
| |
|---|
| Median (39 companies) | 6.7% | 10.1% | 7.4% | 8.9% | -2.7% |
|---|
| Visa Inc. ($V) | - | 21.7% | 12.3% | 11.5% | -4.9% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Verra Mobility Corp ($VRRM) | - | 97.4% | 97.5% | 95.7% | 91.5% |
| EVO Payments, Inc. ($EVOP) | - | - | - | 80.2% | 80.8% |
| StoneCo Ltd ($STNE) | 69.7% | 70.8% | 79.5% | 83.4% | 76.8% |
| WEX Inc. ($WEX) | 54.7% | 58.8% | 63.3% | 61.7% | 56.8% |
| Sabre Corporation ($SABR) | 32.2% | 30.1% | 27.8% | 56.6% | 56.6% |
| |
|---|
| Median (32 companies) | 39.3% | 39.3% | 41.0% | 41.0% | 36.6% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Mastercard Incorporated ($MA) | 56.9% | 56.5% | 51.8% | 60.9% | 56.6% |
| FleetCor Technologies, Inc. ($FLT) | 52.0% | 50.8% | 55.9% | 57.6% | 52.2% |
| StoneCo Ltd ($STNE) | 31.4% | 26.0% | 53.0% | 62.4% | 52.1% |
| Black Knight, Inc. ($BKI) | 43.0% | 44.6% | 43.3% | 46.0% | 44.9% |
| Evertec, Inc. ($EVTC) | 42.8% | 36.9% | 41.5% | 45.2% | 43.1% |
| |
|---|
| Median (38 companies) | 21.2% | 20.6% | 19.2% | 21.7% | 18.2% |
|---|
| Visa Inc. ($V) | 55.6% | 69.2% | 65.8% | 68.1% | 68.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| PagSeguro Digital Ltd. ($PAGS) | 6.4% | 4.3% | 1.4% | 5.8% | 22.3% |
| StoneCo Ltd ($STNE) | 7.2% | 18.4% | 8.9% | 12.9% | 11.2% |
| Cardtronics plc ($CATM) | 9.9% | 9.6% | 8.0% | 9.3% | 8.3% |
| Verra Mobility Corp ($VRRM) | - | 11.5% | 7.2% | 6.6% | 6.2% |
| Fiserv, Inc. ($FISV) | 5.3% | 5.0% | 6.2% | 7.1% | 6.1% |
| |
|---|
| Median (38 companies) | 3.2% | 2.9% | 3.0% | 3.0% | 3.0% |
|---|
| Visa Inc. ($V) | 3.5% | 3.9% | 3.5% | 3.3% | 3.4% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Mastercard Incorporated ($MA) | 57.5% | 60.6% | 64.7% | 72.7% | 47.6% |
| International Money Express, Inc. ($IMXI) | -1.3% | -1.4% | 12.1% | 36.0% | 31.4% |
| NIC Inc. ($EGOV) | 63.1% | 52.1% | 39.3% | 26.5% | 30.8% |
| Western Union Company (The) ($WU) | 10.7% | 11.9% | 27.8% | 21.5% | 22.1% |
| TTEC Holdings, Inc. ($TTEC) | 10.1% | 16.1% | 13.5% | 16.8% | 21.1% |
| |
|---|
| Median (39 companies) | 11.1% | 10.6% | 10.2% | 8.2% | 5.5% |
|---|
| Visa Inc. ($V) | 18.1% | 21.9% | 23.0% | 27.2% | 23.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| WEX Inc. ($WEX) | 6.7x | 4.4x | 3.1x | 3.4x | 12.1x |
| Exela Technologies Inc ($XELAU) | 8.1x | - | 9.7x | - | 10.7x |
| Alliance Data Systems Corporation ($ADS) | 10.7x | 10.1x | 9.0x | 11.7x | 9.2x |
| Verra Mobility Corp ($VRRM) | - | 10.7x | 6.9x | 3.5x | 4.7x |
| GreenSky, Inc. ($GSKY) | -1.5x | -1.5x | 0.5x | 1.5x | 4.6x |
| |
|---|
| Median (35 companies) | 1.6x | 2.3x | 2.2x | 2.3x | 2.1x |
|---|
| Visa Inc. ($V) | 1.2x | 0.7x | 0.6x | 0.6x | 0.6x |
