Research archive for V

Last week Visa reported their 4Q and full year numbers, beating market expectations on the top and bottom line. Reading through their earnings call, it is amazing to see the insights that they get globally, thanks to seeing spending changes. They have noticed a spending drop off in areas hit by recent natural disasters. More developed regions spending returned to normal in a shorter period when compared to less developed areas. Another thing they pick up is the impact of currency changes on spending and travelling. Speaking of travelling, they saw a 10% rise in the number of cross-border transactions; high margin business for them and good news for our investment in Priceline.

Visa inc. reported their third quarter results for the period to end 30 June. It was a beat by most metrics, the business reported net income of 2.1 billion Dollars, or 86 US cents per share off revenues of 4.6 billion Dollars. Remember that Visa Europe is now fully integrated into group, payments volumes increased a whopping 38 percent to 1.9 trillion Dollars. 28.5 billion transactions in total. During the quarter, the group also returned 2.1 billion Dollars to their shareholders, by way of dividends and share buybacks (59.2 million shares bought back at an average of 86.82 for the last nine months). There is still 5.5 billion Dollars available for repurchases inside of the current program, or roughly two and a half percent of the current market capitalisation.

"Visa has recognised the net benefits for merchants when they reduce dependency on cash transaction. Visa recently conducted a study that found that if businesses in 100 cities transitioned from cash to digital, their cities stand to experience net benefits of $312 billion per year. According to this study, in New York City alone, businesses could generate an additional $6.8 billion in revenue and save more than 186 million hours in labor, by making greater use of digital payments. This amounts to more than $5 billion annual costs savings for businesses in New York."

Last week we had market beating numbers from Visa, this was for their (Fiscal Second Quarter 2017 Key Highlights). Here are the numbers quickly, Revenue of $4.48 billion growing at 23% (expectation was $4.3 billion), Adjusted Net income of $2.1 billion which translates into EPS of 86c growing at 27% (expectation was for 79c). The market has come to expect outperformance from Visa, the stock is only slightly up (less than 1% as I look at it) after these results. Even though popping share prices are exciting, not much movement in the price after a good set of numbers means that all of a sudden you can by the same stock at a cheaper valuation.

Visa takes you places. It is far easier than at any time to access your funds, no matter where you are. It is difficult to believe that the first ATM turns 50 this year, it is known that cash is still used amongst many, see the recent crisis in India with the notes removal from circulation to know how many people are completely reliant on the physical "stuff". I recall recently ABSA working with Visa to integrate fingerprint technologies on their ATMs (Visa testing biometric verification). Cash remains, electronic transactions and the associated technologies are on the rise, replacing the old methodologies. You will recall from the piece that was included in links the other day about "money" that cowries (the beautiful shell) used to be a means of currency in wide parts of our continent, see - Shell money.

Visa reported numbers after market two nights back. These are for their fourth quarter and the year end. First, as always, a little perspective on what they (Visa) do. Last year, 2015, they processed 71 billion transactions on 2.4 billion cards. That means that roughly every third person on the planet has one Visa embossed card. 7.4 trillion Dollars worth of merchandise was bought on Visa cards last year. Whoa! Forget the fact that cash will become increasingly irrelevant, so will the physical cards themselves. You will increasingly use nifty technological options to pay for goodies. And there will be and are many growth opportunities globally, for instance in the prior year annual report, this line caught my eye:

Visa announced a CEO succession plan, indicating that CEO Charlie Scharf would resign as he cannot commit 100 percent to spend the time in San Francisco. What the hell? Does he not like catching the tram or something? Does staring at Alcatraz give him the heebie-jeebies after watching that dumb movie with the green balls and Nicholas Cage? Is he a cyclist or runner and the hills are getting him down? Or is the family life taking strain and the commute too much? Whatever the reason, Alfred F. Kelly, Jr. (not related the Alfred E. Neuman) will assume the reigns of what is an incredible opportunity for him personally. A 23 year veteran of American Express, Kelly was in charge of Global Consumer and Consumer Card Services groups. Yes. Kelly is currently a board member at Visa, the company and the culture is nothing new to him. Scharf will deliver results for the last time next Monday evening. Look out for those sports lovers. I personally cannot wait.

Visa takes you places. Visa will be in your face over the coming weeks as a Worldwide Olympic Partner, those are two weeks away sports lovers. An amazing thing really, the Olympic Games, this one will of course be no exception. Equally, Visa is an amazing company. Their ability to run a network that will switch your transaction in a single swipe, regardless of whether you are in any of the major cities of the world and regardless of where your bank is. The fact that there can be guaranteed payment to the merchant, no cash ever exchanges hands and your risks are greatly reduced, that part you just take for granted. We don't even bat an eye.

Visa reported numbers last evening. This is one of the most exciting companies to own. And the thesis is pretty simple really. The fact that we are moving towards a cashless society with more speed and momentum than at any time in history means that this company will continue to be the beneficiary of a move away from physical currency. It is amazing to think that in an internet covered world, people still use physical cash as much as they do. I saw just the other day that the German finance ministry was mulling whether to put a cap on the Euro value of any transaction, 5000 Euros would be the maximum on a cash transaction. We often say when looking at Visa's business that governments, tax authorities, banks and financial institutions would prefer this type of ability to monitor all transactions, and thereby making the transportation networks and security carrying costs of cash obsolete. Of course not everyone has a cell phone and debit/credit card.

Visa reported numbers after the bell yesterday. Visa of course is one of the largest companies on the planet that enables seamless payments on their switching networks, be it that you are transacting online, in a foreign country and paying for goods and services, or whether you simply are at your local store that offers the service. Remember checks and travellers checks? I guess in the years to come you could argue the case for a cashless society and companies with the payments systems, those who enable the merchant to speak to your financial institution across their reliable and trusted networks and "get the transaction done" are operating in the right space. And by right space, I mean that a company like this, their peers and other payment networks, will see an uptick in their business.

A Visa is an annoying stamp that you need when you are going to visit a place, even more so if you are going to spend a short holiday there and spend your money. It is a less annoying when you are using a card in far flung parts of the world and are paying for something rather than carrying cash. In their "Our business" segment on their website, I think that they sum it up perfectly with the ease of use: "We have a simple and unwavering vision that can be traced back to our beginnings in 1958: To be the best way to pay and be paid for everyone, everywhere. We know that every Visa transaction is a promise. Whether it's a street vendor in Brazil selling food to make a living or a fisherman in Rwanda paying his daughter's school fees, we want to provide the most secure and seamless payment experience possible."

Hey, this caught my eye yesterday, an announcement by Visa -> Visa Introduces EMV Chip-based Biometrics. Visa is teaming up with ABSA here in Mzansi (why not, for sho!) with biometric cardholder verification. That is fancy for fingerprint technology. So as far as I understand it from the release, you will stick your card into the ATM and instead of being asked for a pin, you will place your fingerprint there and hey presto, the cash will come out of the machine. It will verify that you indeed are the person who owns the bank account and the funds are yours. No more hands covering the pin pad, nobody can steal your fingerprints. Hopefully very soon the card itself will be nowhere, Apple Pay and Android Pay (its newer, check it out: Android Pay) can solve the physical card issue.

Visa takes you more than places. Some Visas are harder to get than others. Some have reams and reams of documentation. This Visa however requires that you pay your bank back, they will facilitate the payment. I have heard the theory that the winners in the electronic payment systems will be newer systems. The fact of the matter is that the capital controls imposed on Greeks shows how reliant people are on cash. The machines in the shops worked, it was the way of life, paying for everything cash all the time that is pretty old and outdated.

Visa. What a business! Along with MasterCard, the company is trying to send cash into the afterworld, one swipe at a time. The reason why Visa remains extremely attractive as an investment is clear, whilst politicians may think that the company charges too much for their services, the fact is that they have engineered global payment networks that work like clockwork and is easily accepted at most global pay points. There is no need to get travellers cheques, there is no need to get cash and get ripped off on the exchange rate. You can draw money out of any ATM anywhere in the world, in the local currency if you need cash when you have arrived at your destination.

Visa takes you places. It seems that it has taken you further as an investor in its not so long period as an investment, the company has only been listed since March 2008, March 18 to be precise, be sure to put that into your calendar as the day BEFORE my birthday, OK? Accepting all presents now, we are open. Just a refresher in terms of ownership structure, the Western European operation is a separate business under the same brand, principally owned by the member banks in that region. Since it listed back then, the company has returned an astonishing 285 percent to their shareholders, that is nothing short of remarkable.