Visa's Annual Report for 2016

49373.indd 1 11/29/16 3:30 PM 49373.indd 2 11/29/16 3:30 PM 49373.indd 3 11/29/16 3:30 PM Financial Highlights GAAP In millions (except for per share data) FY 2014 FY 2015 FY 2016 Operating revenues $12,702 $13,880 $15,082 Operating expenses $5,005 $4,816 $7,199 Operating income $7,697 $9,064 $7,883 Net income $5,438 $6,328 $5,991 Stockholders' equity $27,413 $29,842 $32,912 Diluted class A common stock earnings per share $2.16 $2.58 $2.48 Financial Highlights ADJUSTED1 In millions (except for per share data) FY 2014 FY 2015 FY 2016 Operating revenues $12,702 $13,880 $15,082 Operating expenses $4,555 $4,816 $5,060 Operating income $8,147 $9,064 $10,022 Net income $5,721 $6,438 $6,862 Diluted class A common stock earnings per share $2.27 $2.62 $2.84 Operational Highlights4 12 months ended September 30 (except where noted) 2014 2015 2016 Total volume, including payments and cash volume2 $7.3 trillion $7.4 trillion $8.2 trillion Payments volume2 $4.7 trillion $4.9 trillion $5.8 trillion Transactions processed on Visa's networks 65.0 billion 71.0 billion 83.2 billion Cards3 2.3 billion 2.4 billion 2.5 billion Stock Performance The accompanying graph and chart compares the cumulative total return on $400 Visa’s common stock with the cumulative total return on Standard & Poor’s 500 Index and the Standard & Poor’s 500 Data Processing Index from September 30, $350 2012 through September 30, 2016. The comparison assumes $100 was invested on September 30, 2011, and that dividends were reinvested. Visa Inc.’s class B $300 and C common stock are not publicly traded or listed on any exchange or dealer quotation system. $250 $200 Base Indexed Returns period (Fiscal Year Ended) $150 Company/Index 9/30/11 9/30/12 9/30/13 9/30/14 9/30/15 9/30/16 $100 Visa Inc. 100.00 157.87 226.48 254.78 335.07 400.66 9/30/11 9/30/12 9/30/13 9/30/14 9/30/15 9/30/16 S&P 500 Index 100.00 130.20 155.39 186.05 184.91 213.44 S&P 500 Data 100.00 142.00 198.30 225.94 269.30 313.95 Visa Inc. Processing Index S&P 500 Data Processing Index S&P 500 Index ¹ For further discussion of fi scal years 2016, 2015 and 2014 non-GAAP adjusted operating expenses, operating income, net income and diluted earnings per share, see Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Adjusted fi nancial results in this Annual Report. The per share amounts for the prior periods presented have been retroactively adjusted to refl ect the four-for-one stock split eff ected in the second quarter of fi scal 2015. ² Total volume is the sum of payments volume and cash volume. Payments volume is the total monetary value of transactions for goods and services that are purchased on Visa-branded cards and payment products. Cash volume generally consists of cash access transactions, balance access transactions, balance transfers and convenience checks. Payments volume for the 12 months ended June 30 is the basis for service revenue for the 12 months ended September 30. For further discussion, see Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Nominal payments volume and transaction counts in this Annual Report. ³ These fi gures represent data for the quarters ended June 30, 2016, June 30, 2015 and June 30, 2014. ⁴ Includes Europe results in fi scal fourth quarter 2016. 49373.indd 4 11/29/16 3:30 PM A letter from Charles W. Scharf Dear Shareholders, It has been another year of great change within the payments industry and Visa continues to work to position itself as the global payments leader. Our position working with issuers and began to dissipate towards the end of the payments capabilities to our clients. In their customers and acquirers and their calendar year and we expect this trend to the near-term, we expect to improve our merchant clients enables us to connect continue in 2017. yields, reduce costs and very quickly deliver over 3 billion payment accounts to more digital solutions for our clients. Despite the headwinds, we have delivered 44 million endpoints – a network that Longer term, Europe represents a new very strong underlying franchise growth has extraordinary value. However, the attractive opportunity for ongoing growth, and continued to invest in new capabilities continually changing landscape requires with over $3.0 trillion of Europe’s personal and partnerships across the globe. Visa to constantly re-define how we consumption expenditure still transacted Normalized for Europe results² and on a interact with our clients and partners and with cash and checks. constant dollar basis, payment volume to continually add capabilities that can be increased 9.9% and processed transactions As we look ahead, we continue to believe delivered through our clients. grew 10.5%. We invested heavily in our our global opportunity for growth is 2016 Performance strategic priorities while holding overall huge. Our business grows with the global Visa delivered good financial results for adjusted¹ expense growth to 5.1% economy and there is still enormous 2016 in a less than robust global economic (including the addition of Visa Europe opportunity to displace cash and checks. environment. We reported adjusted¹ discussed below). I will talk more about The safety and efficiency of electronic earnings per share growth of 8.5% and net progress against these priorities below. payments is almost always a better revenue growth of 8.7% in the full fiscal solution for individuals and merchants We also completed the acquisition of Visa year. We were able to deliver this growth – of any size and any wealth level. Most Europe during the year. Reuniting our despite the headwinds of the strong U.S. exciting, today we have more ways to companies was extremely important for dollar, low oil prices, and the uneven global displace that cash than ever before. us, most importantly because we operate economic recovery. These growth rates are as one brand with shared global clients, below what you should expect of us over and we, as one integrated global company, the longer term. In fact, these headwinds can deliver a much more robust set of ¹ Adjusted earnings per share and operating expenses for the fiscal full-year 2016 exclude the impact of significant non-recurring items primarily related to the acquisition of Visa Europe. Please see reconciliation in Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview – Adjusted fi nancial results in this Annual report. ² Includes Europe results in both current and prior year. 49373.indd 5 11/29/16 3:30 PM Gl bal Refl ecting on our progress My priorities were clear: As I reach the end of my tenure at Visa, I’ve 1. Ensure that we have the best had a chance to reflect on our rich history, management team in the business for our current position, and where we go the challenges and opportunities in from here. front of us. Our first fifty years as a series of regionally 2. Create a culture inside Visa where we owned and controlled bank owned value our past but move with haste associations was a model which allowed towards the future by taking appropriate us to build one of the most recognized risks brands around the world. The benefits of the single brand and a common 3. Define a clear set of strategic priorities interoperable operating platform, matched that we organize and execute around – with locally driven strategies, proved to be including: a winning combination. a. Continue to be a great partner to In 2007, all the regional associations except issuers, but embrace merchants and Europe merged into a single company third parties who support our four and went public in 2008 in the second party model largest U.S. public offering ever. The next four years were focused on merging b. Transform our technology platform these entities, learning to act like a for and how we use it with clients and profit company where you have to earn partners your clients’ partnership every day, and c. Enable digital commerce as effectively working to act as a single integrated global as we had enabled commerce at the company. physical point of sale When I arrived in November 2012, much d. Lead the industry in payment security of the heavy lifting had been completed. We had made so much progress under Joe e. Expand access to our network and Saunders’ leadership as CEO that I had the services luxury of looking towards new challenges f. Create an environment inside Visa and opportunities. For years, payments focused on attracting and retaining had been something few had focused the best and brightest people in on, but that was dramatically changing. payments With both Visa and MasterCard going public, people saw what a great business 4. Create a true global company by payments was. And, with e-commerce acquiring Europe on terms and with a growth accelerating and beginning to structure that made sense for all parties migrate to mobile devices, there were We have made great progress across each, more opportunities for people to insert and while there is always more to do in a themselves into the payment chain. business which is changing rapidly, what follows is a brief reflection.

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