Company introduction
Visa Inc. (V) is one of the world’s leaders in digital payments. Visa earns revenue by facilitating money movement across more than 200 countries and territories among a global set of consumers, merchants, financial institutions and government entities through innovative technologies.
Visa has four reportable segments: service revenues, data processing revenues, international revenues and other revenues.
Service revenues
Earned for services provided in support of client usage of Visa payment services.
Data processing revenues
Earned for authorization, clearing, settlement; value added services related to issuing, acceptance, and risk and identity solutions; network access; and other maintenance and support services that facilitate transaction and information processing among our clients globally.
Other revenues
Consist mainly of value added services related to advisory, marketing and certain card benefits; license fees for use of the Visa brand or technology; and fees for account holder services, certification and licensing.
Asset structure analysis
Visa’s fiscal year 2023 ends on September 30.
Visa ‘s total asset as of September 30,2023 was $90.5 billion, a increase of 6%, compared to $85.5 billion as of September 30, 2022.
The change of total asset is almost flat.
Visa ‘s goodwill was $18 billion as of September 30,2023, which accounted for 20% of total assets.
Vsia ‘s intangible assets, net were $26.1 billion as of September 30, 2023, which consisted of 28.8% of total assets.
By analyzing goodwill and intangible assets, you could see that the company has made a number of acquisitions in the past.
Property, equipment and technology, net was $3.4 billion as of September 30,2023, which constituted 3.8% of total assets.
The amount of property, equipment and technology was small.
In investing activities, purchase of property, equipment and technology was $1 billion, $0.97 billion and $0.7 billion for 2023, for 2022 and for 2021, respectively.
I’m glad that Visa ‘s capital expenditure has been very minimal. People are more willing to invest in companies those ones have very little capital expenditure, and then leave more cash to return to shareholders.
Liquidity and solvency analysis
Visa ‘s current assets were $33.5 billion ,and Visa’s current liabilities were $23 billion in fiscal year 2023.
The current ratio was 1.46 times , which indicated that current assets covered current liabilities 1.46 times in fiscal 2023.
The liquidity was very strong.
In addition, the solvency was very strong as Visa has generated substantial amounts of net cash from operating activities.
Profitability analysis
Visa ‘s net revenues were $32.6 billion, $29.3 billion and $24.1 billion in fiscal year 2023, in fiscal year 2022 and in fiscal year 2021, respectively.
The increase in net revenues was $3.3 billion or 11% to $32.6 billion in fiscal year 2023, compared with $29.3 billion in fiscal year 2022.
The increase in net revenues was $5.2 billion or 21.6% to $29.3 billion in fiscal year 2022, compared with $24.1 billion in fiscal year 2021.
Visa ‘s net income was $17.2 billion, $15 billion and $12.3 billion in 2023, in 2022 and in 2021, respectively.
The net profit margin was 52.8%, 51% and 51% in 2023 , in 2022 and in 2021, respectively.
The net profit margin was very high and stable.
Visa ‘s net income in 2023 was up 14.7% year-on-year.
Visa‘s net income in 2022 was up 22% year-on-year.
The growth rate of net income has been more than the growth rate of net revenues sine 2022.
Cash flow analysis
Net cash provided by operating activities was $20.8 billion, $18.9 billion and $15.2 billion in 2023, in 2022 and in 2021, respectively.
The free cash flow was $19.7 billion, $17.9 billion and $14.5 billion in 2023, in 2022 and in 2021, respectively.
Repurchase of class A common stock was $12.1 billion,$11.6 billion and $8.7 billion for 2023, for 2022 and for 2021,respectively.
Dividends paid was $3.75 billion, $3.2 billion and $2.8 billion in 2023, in 2022 and 2021, respectively.
You could see that Visa has returned shareholders by repurchasing stock and paying dividends.
Financial results for Q1 2024
Visa ‘s net revenues were $8.6 billion in the three months ended December 31,2023, a increase of 7.5%, compared with $8 billion in the three months ended December 31,2022.
Net income was $4.9 billion and $4.2 billion in the three months ended December 31,2023 and in the three months ended December 31, 2022.
Visa ‘s net income in the three months ended December 31,2023 was up 17% year-on-year.
Summary
Visa ‘s profitability has been very strong.
Visa ‘s capital expenditure is very minimal.
I reckon that Visa is worth $250 billion, though Visa ‘s capitalization is about $562 billion.
Disclaimer: The content is for reference only and does not constitute investment advice.