VISA Report - Revised

1 University of Oregon Investment Group
May 20th
, 2016
Technology
Covering Analyst:
Alex Marcinkowski – amarcin2@uoregon.edu
Investment Thesis
 Visa’s current price represents extreme bullishness on Visa’s future and
exemplifies intrinsic overvaluation because on the attractiveness of Visa’s
industry and market positioning
 The high government oversight in the payments processing industry limits
future growth and Visa’s open-loop payments system when compared to
similar closed-loop systems of Capital One and American Express
 Visa’s hefty premium paid for Visa Europe does not adequately factor in
the riskiness of the transaction and overestimates growth in Europe where
less than half of personal consumption is settled in cash or check
 Given Visa’s slowing growth over the past quarters, the company has begun
to reach a size and global scale where Visa will experience slower future
growth as they see difficulty expanding in a more mature market
Visa, Inc.
Ticker: V Rating: Underperform
Price Target: $66.26
Action Recommended: Exit Position
Current Price: $77.42
0
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Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16
Volume Adjusted Close 50-Day Avg 200-Day Avg
One-Year Stock Chart
Key Statistics
52 Week Price Range
50-Day Moving Average 78.18
Estimated Beta
Dividend Yield
Market Capitalization (B)
3-Year Revenue CAGR
Trading Statistics
Diluted Shares Outstanding (mm) 2,006
Average Volume (3-Month) 8,257,080
Institutional Ownership
Insider Ownership
EV/EBITDA (LTM)
Margins and Ratios
Gross Margin (LTM)
EBITDA Margin (LTM)
Net Margin (LTM)
Debt to Enterprise Value
$60.00 - 78.06
1.15
0.70%
192,165
10.02%
68.68%
47.65%
.08x
93%
0%
18.62x
96.50%

University of Oregon Investment Group
UOIG 2
May 20th
, 2016
32.1%
28.3%
20.7%
4.2%
-14.6%
Service Revenues
Data Processing
Revenues
International
Transaction Revenues
Other Revenues
Client Incentives
Source: Google Images
Figure 2: Visa Revenue Segments
Source: SEC Filings, Visa
Figure 3: Visa Revenue Growth
Source: UOIG Spreads
Figure 1: Original BankAmericard
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$-
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2010 2011 2012 2013 2014 2015
Total Revenue % Growth
Business Overview
Company History
Visa was launched in 1958 by Bank of America as the first consumer credit card
in the world. Initially named the BankAmericard, it was targeted at middle class
consumers and small to medium sized merchants across the United States. Over
the following years, various banks licensed the cards issued by Bank of America,
forming a network of financial institutions backing the payment system. As the
licensee program grew, they began experiencing problems with interchange fees,
oversight, and poor efficiency born out of the rapid and fragmented growth of the
card. In June 1970, Bank of America relinquished control of the BankAmericard
and handed the reins over to the issuing banks, who formed National
BankAmericard Inc. Later, in 1976, it was determined the Visa would form a
single network, and combine all the prior licensing agreements under a single
name, Visa.
In 2006, Visa announced that it would merge international brands and restructure
in order to IPO in the following year. On October 3, 2007 Visa completed their
initial public offering under the ticker V, and raised 19.1 billion dollars, making
it the largest initial IPO in U.S. history at that time. Currently, Visa is
headquartered in Foster City, California and employs over 11,000 people globally.
Business Structure
Visa is a payments technology company that provides electronic payments
processing to people and business across the world. Visa operates on open-loop
payments system, wherein Visa connects and facilities exchanges between issuers
and acquirers. The issuers are financial institutions who issue Visa cards to their
customers. The acquirers are the financial institutions that have contracts with
merchants to accept Visa cards and products. An important distinction is that Visa
does not earn any revenue nor are they liable for risk associated with interest or
fees paid by account holders of Visa products. The fees and rates are set by the
issuers.
The aforementioned fees are known as interchange reimbursement rates and are
paid by acquirers to the issuers, and Visa does not receive revenue related to these
fees. In the same manner, Visa does not earn revenue from fees charged to
merchants by acquirers for acceptance by acquirers, most widely known as the
merchant discount rate. These do however directly affect Visa’s ability to conduct
business profitably and attract clients.
Products and Services
Visa offers a variety of payment services that support the products that issuers
offer their account holders. The three products Visa supports are most broadly
defined as debit, credit and prepaid.
Visa’s utility is offering processing services that route payment information and
data to aid in authorization, clearing and settlement of transactions between
acquirers and issuers. Their centralized processing infrastructure is known as
VisaNet, where nearly all transactions are routed through. Visa's processing
services also encompass the merchant gateway and Visa Debit Processing
Services. Merchant gateway services make it easier for eCommerce merchants to
“accept, process and reconcile payments, manage fraud and safeguard payment

UOIG 3
May 20th
, 2016
Source: IBISWorld
4% 5%
91%
Increased
Positions
Decreased
Positions
Held
Positions
Figure 4: Visa Institutional Ownership Change
2398.00 2490.00
855.00 896.00
1543.00 1594.00
2014 2015
Total Cards (millions) Credit
Debit Growth
Growth
Source: NASDAQ
Figure 5: Visa Cards in Circulation
Source: Visa Investor Relations
Figure 6: Industry Revenue Growth
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$70,000
2010 2011 2012 2013 2014 2015 2016
Total Revenue % Growth
security online.” DPS provides comprehensive issuer processing services for
participating issuers of Visa debit, prepaid and ATM payment products.
Revenue segments
Visa recognizes revenue based on the 5 segments detailed below, all functioning
around their service of processing transactions.
Services Revenue
These are derived from support services for the delivery of Visa’s payment
products to financial institution clients. Service revenues are driven primarily by
payments volume on Visa cards and products.
Data processing Revenue
These are derived from authorizing, clearing, settling, allowing access and
providing other support and maintenance services among issuing and acquiring
clients. Data processing revenues are primarily driven by the total number of
transactions Visa processes.
International Transaction Revenue
These are derived from cross-border transaction processing, which occurs when
the country of the issuer is different from that of the merchant, and currency
conversion services. These are primarily driven by cross-border volume.
Client Incentives
These are a contra-revenue segment that consists of long-term contracts with
financial institution clients and other partners for the purpose of increasing
acceptance and winning merchant transactions.
Other Revenues
These are derived mainly from license fees for use of the Visa branding, revenues
earned from Visa Europe in connection to the Visa Europe Agreement, fees on
account holder services and other activities related to Visa entities.
Industry
Overview
Visa operates in the credit card processing & money transferring industry. This is
a mature yet evolving industry with strong margins and high growth rates. The
industry has a medium level of concentration, with the top four industry players
commanding an estimated 50.3% of industry revenue in 2016. As a whole, the
industry has fantastic growth potential as consumers decrease cash and check
usage in favor for credit cards and other electronic payment methods.
Given the opportunities in this industry, it is also a highly competitive place to
operate. The industry generates a majority of its revenue through data processing
and transaction fees on debit and credit card purchases, although it consists of a
wide variety of services and activities related to financial intuitions. Because of
the financial nature of the industry, it is one that is very highly regulated and

UOIG 4
May 20th
, 2016
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2014 2015 2016 2017 2018 2019
E-Commerce % Change
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2014 2015 2016 2017 2018 2019
CCI %Growth
Source: Yahoo! Finance
Figure 8: Projected e-commerce Growth
Figure 9: Projected Consumer Confidence
Source: IBISWorld
Figure 7: Visa 5-year stock chart
Source: IBISWorld
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May-11 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14 Nov-14 May-15 Nov-15
Adjusted Close 50-Day Avg 200-Day Avg
subject to increasing government oversight, litigation problems and anti-trust
violations.
Outlook
The outlook of the industry looks extremely promising over the coming years.
IBISWorld anticipates revenue for the Credit Card Processing and Money
Transferring industry to grow at an annualized rate of 4.4% to $72.0 billion in the
five years to 2021.The decline of cash and checks is a natural progression in
today’s technologically oriented society and directly correlates to growth in
electronic payments. Continued advances in mobile technology allow users to
access banking information, pay bills, and complete transactions on-the-go; a
significant advantage over cash and check. More specifically, technologies
produced by Apple, Google and PayPal have allowed consumers to sync credit
cards with a mobile phone for in-store purchases and have gained ground in the
credit card space at an alarming rate; and are now supported by almost all major
credit cards and banks in the United States.
Macro factors
Consumer Spending and Consumer Confidence
Consumer spending is an extremely important factor in industry demand, as
volume of purchases drives revenue for the industry. As consumers spend more
on products, Visa and others have the opportunity to process more transactions
and experience greater transaction volume. This spending is largely influenced by
consumers’ expectations of future economic conditions, measured by consumer
confidence. Consumer confidence is expected to increase by 3% over the next 4
years, which is an opportunity for payment processors.
E-Commerce Sales
E-commerce sales represent the percentage of consumer retail purchases done
online as compared to retail stores. Considering online sales are generally required
to be settled in electronic form, they are a key driver of industry revenue. E-
commerce sales have been steadily increasing for years, and have a 5.4% expected
growth from 2016-2021 according to IBISWorld. As e-commerce continues to
grow, the shift away from cash and check payments will by further exenterated
and consumers will naturally move towards electronic methods as the primary
form of payment.
Per Capita Disposable Income
Per capita disposable income reflects an individual’s ability to purchase goods
and services, particular non-essential items. As individuals spend more, it drives
payment volume and transaction numbers, which are important drivers in industry
demand. As more income signifies greater spending, industry operators garner
revenue from greater number and volume of transactions.
Regulatory Environment
The great value of the data being held and transported by firms in this industry
make it subject to high levels of government regulation and oversight. Rules were
implemented in the U.S. during 2011 and 2012 with respect to debit products
under the Dodd-Frank Act, which regulates debit interchange reimbursements
rates, and the availability of debit networks and merchant transaction routing

UOIG 5
May 20th
, 2016
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80.0%
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2013A 2014A 2015A 2016E
EBITDA Margin EBITDA Growth
Figure 10: Cards outstanding by Company
Source: CardHub Statistics
Figure 11: Visa EBITDA Growth
Figure 12: Annual Purchase Volume (Trillions)
Source: CardHub Statistics
$0
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Annual Monthly
choice. Many jurisdictions have adopted or are considering regulations that
require payments system participants, to monitor, identify, filter, restrict or take
other specific actions with regard to certain types of payment transactions. For
example, “U.S. federal legislation has been enacted that requires payment system
operators to implement a system that allows issuers to identify Internet gambling
transactions so they have the option to decline such transaction requests. State
governments have been interested in the potential blocking of Internet interstate
sales of cigarettes and alcohol, or the collection of state and local sales taxes on
such Internet purchases.” Implementing such systems increases costs for Visa,
and may reduce merchant acceptance of Visa-branded cards and payment
products for these purchases.
Competition
This industry is highly competitive due to its attractive growth prospects and
strong margins. Furthermore, the industry is fairly fragmented because it
comprises a wide variety of companies with different specialties. Services that
this industry performs include nearly every type of financial transaction,
comprising check processing, ACH payments, wire transfers, debit card and credit
card purchases, and e-money. The increase in technological innovation makes this
a rapidly evolving industry, wherein certain competitors are better positioned than
others to capitalize on future growth. Companies like PayPal, Visa, and
MasterCard are better positioned for future changes because they represent the
growing segments of this industry as more payments are being conducted
electronically. In the past few years, new firms have entered the industry because
of innovations in technology and have been able to establish themselves legitimate
market operators.
Although the industry has a large amount of participants, the majority of revenue
is captured by the larger processing enterprises who have the financial resources
to establish a brand and offer competitive prices, which could cause establishment
numbers to decrease. Because universal acceptance of a firm’s products is such a
necessity in this industry, large companies are born out of necessity for scalable
operations. That being said, the raise of e-commerce and e-money have paved the
way for new players to enter the industry with innovative technologies to serve
enterprises and consumers in unique ways. While new players may be entering
the market, the very nature of the industry itself means they are likely buyout
targets, rather than establishment players. In credit card and payments processing,
the market is likely saturated enough to prevent future pure-play competitors from
entering.
Consolidation in the banking sector, as a result of the global financial crisis, has
hurt the industry. As a result of consolidation among banks, existing client
accounts have closed, leaving a smaller pool of potential clients. Now revenue is
derived from a smaller number of large clients, who have significant bargaining
power over industry firms. This consolidation also leaves firms exposed to
increased risk in the event a contract with a large institutional client is lost. This
consolidation has inherently tightened margins and increased competition for
financial clients. Any further merger and acquisition activity in the banking sector
will have a negative effect on market participants in this industry, further
increasing competition in an already highly competitive market.
As the world increasingly shifts to electronic payment methods over cash and
check, this will spur the entrance of new competitors seeking to capitalize on this.
Most importantly, the ability to have excellent mobile and e-commerce
technology will by key to sustained success in this industry. The ability to provide

UOIG 6
May 20th
, 2016
Revenue $13,880
EBIT $9,064
Net Income $6,328
Operaing Cash Flow $6,822
NWC -$1,494.00
FCF $5,990
EBITDA $9,558
Figure 13: Enterprise Value
Source: IBISWorld
Figure 14: Visa Key 2015 Statistics
Figure 15: Visa Dividend Increases
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Visa MasterCard American
Express
PayPal Total System
Services
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
8/1/2011 8/1/2012 8/1/2013 8/1/2014 8/1/2015
cost-effective, easy-to-use and secure platforms will be a differentiator among
firms going forward.
Barriers to entry
Barriers to entry in this industry are very high due to its highly technical and
regulated nature. Participants in the industry must be in accordance with all
federal and state laws associated with money transferring on top of establishing a
client base in a highly competitive industry. The initial capital cost of building a
client base is immense and nearly impossible for a firm competing against
streamlined, establish brands like Visa and PayPal. Additionally, firms must
invest heavily in infrastructure like data centers and server farms to securely
process large numbers of transactions. Continual capital expenditures are
necessary as well in order to maintain state-of-the-art infrastructure. This industry
requires necessary economies of scale in order to be successful, and to attain those
benefits, a firm must be very large and global in nature.
Strategic Positioning
Market Share
Visa dominates the global market for electronic payments, accounting for nearly
half of the global credit card and three quarters of global debit card transactions.
Because of this, they have built and maintained a strong client base of the biggest
merchants and banks in the world. The Visa brand has become synonymous with
cards and their recognition as the premier provider of processing services is un-
paralleled. Market share is of particular importance in this industry because the
success of Visa depends on the universal acceptance of their cards. As more
merchants accept their cards, it incentivizes others to due to the same because
more of their customers will be using Visa cards.
Leverage over Clients
As Visa is the largest payment processor in the world, it holds significant leverage
over its financial and merchant clients. The amount of business Visa represents
for financial institutions makes them an indispensable client. Furthermore,
customers of financial firms and merchants alike have grown accustomed to Visa
as a form of payment and are familiar and comfortable with the brand. As such,
the Visa Brand has significant staying power due to its entrenchment in the
industry.
Wide Economic Moat
Visa’s wide moat is primarily due to the irreparability of its payment network. A
payment network that is widely accepted is very attractive to customers, and a
payment method that many customers use is very attractive to merchants.
Therefore, the sheer amount of use and universality of Visa products makes it a
difficult company to emulate. To create the system that Visa has requires large
contracts with banks, merchants and the ability to establish acceptance of the
firm’s proprietary payment system. In addition, the trust and security Visa has
built into their relationships is something merchants and financial value as
paramount when dealing with money transfers.
Security
Visa’s highly secure network makes it an ideal choice for merchants, banks and
consumers alike. Visa engages actively with financial institutions, merchants,

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0
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2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
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Capital Expenditures
Change in Net Working Capital
Capital Expenditure (% of Revenue)
Figure 16: Visa New Products
Figure 17: Visa Projected EBIT Growth
Figure 18: Visa CAPEX Projections
mVisa
Visa Checkout
Visa PayWave
Visa Direct
Mobile cardless purchasing solution
E-Merchant bank account and
payment system
Payment through smartphone and
contactless card
Peer-to-peer payment system
governments, regulators, and law enforcement to mitigate security concerns and
establish best practices in the industry. At Visa’s scale, they have the size and
resources necessary to innovate security solutions and maintain state-of-the art
software and hardware. “In 2015, Visa launched a number of new fraud
prevention and risk management capabilities, including Mobile Location
Confirmation, Decision Manager Replay for merchants, and an enhanced Alerts
capability available through APIs. Visa also introduced tokenization, which
replaces account number with digital token for online and mobile payments.” This
removes essential account information and has potential to reduce fraud risk. Visa
also introduced EMV chip technology in 2015, which reduces point-of-sale fraud
by securing data by storing it on chips, instead of the magnetic stripes.
Business Growth Strategies
E-Commerce and M-Commerce
The growth of e and m-commerce require the need to move beyond physical
cards and adapt technology to be able to effectively process payments online or
on the phone. Visa needs to adapt its technology in order to seamlessly operate
over these new platforms and need to ensure they promote acceptance over both
their merchant and financial institution clients. Visa has actively sought
partnerships with companies in this space like Samsung, Google, Square and
Apple. The early success of Apple and Samsung Pay bode well for Visa’s
success in these areas.
New Payments Products
Visa is attempting to maintain the dominance they have seen in the physical
world into the digital age. In 2015, Visa launched their Digital Solutions
Platform. 2015 also started the mVisa pilot in India. mVisa is a new mobile
payment service that enables consumers to make cardless purchases, pay bills
and send money to other individuals via “pushing” a payment from their bank or
stored value account via their mobile phone as opposed to the traditional method
of a merchant “pulling” funds on a terminal from a piece of plastic. It is being
piloted with merchants across the Bangalore region and with customers of our
four large Indian bank clients.
Visa Checkout: Visa Checkout is a payment method that allows consumers to
pay for goods online on a smartphone, tablet, laptop or desktop. Visa Checkout
is essentially the equivalent of a PayPal account, although it is not as widely
accepted presently. 2015 did see the expanded the adoption of Visa Checkout
and today Visa Checkout covers nearly $85 billion of addressable E-commerce
volume with nine million registered users in 16 countries. This service is
presently available for e-commerce merchants and financial institutions in 16
countries around the world including Australia, Argentina, Brazil, Canada,
Chile, China, Colombia, Hong Kong, Malaysia, Mexico, New Zealand, Peru,
Singapore, South Africa, United Arab Emirates, and the U.S.
Visa payWave: With Visa payWave technology, consumers are able to pay for
products and services via smart phone or other devices, and by using their
contactless cards at physical retailers. PayWave is essentially Visa’s proprietary
application that functions similarly to Apple Pay or Samsung Pay, but it can also
be enabled for physical cards.

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Figure 19: Visa International Growth
Figure 20: Visa Growth since Pitch
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Figure 21: Visa Executive Compensation
Source: Morningstar
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Total executive compensation ($mm)
Visa Direct: Visa Direct provides a fast, secure and convenient solution for
Visa’s ecosystem of clients and partners. It enables customers to send and
receive person-to-person payments and funds disbursements, and facilitates
business to business settlements directly to eligible Visa account holders quickly
and securely.
Visa Europe
In November of 2015 Visa announced the signing of an agreement to acquire
Visa Europe. Visa Europe is the only regional association which didn’t merge
into Visa Inc. in 2007 and remained a separate entity owned by its members.
Visa Europe represents a significant growth opportunity for Visa and its ability
to capitalize on the European market. The terms of the agreement are an upfront
payment of 11.5 billion euros and 5 billion euros’ worth of convertible preferred
stock followed by an earn-out provision. The agreement was then amended to
increase the upfront by 750 million euros and replace the earn-out with a 1-
billion-euro payment at 4% annual interest payable 3 years after closing. The
agreement hopes to realize synergies between the two entities and their clients.
The two companies have worked closely together since their split before Visa’s
IPO in 2007. The full integration is expected to take 3 to 4 years after closing.
China and Emerging Markets
China is currently writing final rules which will create a process to allow
payment processing firms to apply for a license to compete in the domestic
Chinese electronic payments market. Visa is actively working on plans and
intend to submit their bid to enter the chines market this year. This is a long-
term play and Visa views this a long-term commitment and opportunity to help
grow commerce domestically in China. In 2015, Visa added over 140 million
new cards and delivered meaningful progress in expanding into new acceptance
categories, including education, transit, debt repayment, childcare and taxes.
Visa has 69 Visa Ready mPOS (mobile phones as acceptance devices) and they
now estimate that 5.8 million merchants are using mPOS. In addition, Visa
brought new players into the financial system through a series of Financial
Inclusion programs around the world, including developing a women’s mobile
banking network in Bangladesh; increasing access to digital payments to village
communities in Vietnam; developing alternative credit scoring models in Kenya;
and improving micro-merchant acceptance in Mexico.
Management and Employee Relations
Charles W. Scharf – CEO
Charles has served as Chief Executive Officer and a director of Visa Inc. since
November 1, 2012. Previously, Mr. Scharf was a Managing Director of One
Equity Partners, the private investment arm of JPMorgan Chase & Co. From July
2004 to June 2011, Mr. Scharf served as Chief Executive Officer of Retail
Financial Services of JPMorgan Chase & Co. For 2015, Charles Scharf’s
compensation was $15,180,000; $4,310,000 of which was paid in cash.
Ryan McInerey – President
Ryan McInerney is President of Visa Inc. where he is responsible for leading
Visa’s global client organization, He also is responsible for client support

UOIG 9
May 20th
, 2016
15.4%
21.5%
15.4%
20.8%
25.3%
1.7%
14.9%
20.7%
18.1%
25.7%
20.5%
0.0%
Healthcare Tech Financial IME Consumer Cash
Tall Firs Benchmark
12.8%
3.6%
81.0%
2.6%
8.7%
18.7%
72.7%
0.0%
Small Mid Large Cash
Tall Firs Benchmark
Figure 22: Tall Firs Portfolio Allocation
Source: UOIG PowerPoint
Figure 23: Fall Firs Benchmarking
Source: UOIG PowerPoint
services, global product management and a new solutions group, which focuses
on building and bringing to market new products and services to Visa’s issuer,
acquirer and merchant partners. Prior to joining Visa, Mr. McInerney served as
CEO of Consumer Banking for JPMorgan Chase. His toal compensation for 2015
was $8,154,275.
Vasant M. Prabhu – CFO and Executive VP
Vasant M. Prabhu joined Visa Inc. in February 2015 as Executive Vice President
and Chief Financial Officer. In his role, he overseas Visa Inc.’s financial
strategies, planning and reporting, in addition to all finance operations and
investor relations. Prabhu joined Visa from NBCUniversal Media, LLC, where he
served as chief financial officer. His total compensation for 2015 was $6,056,253.
Rajat Taneja - Executive VP of Technology
Rajat Taneja is Executive Vice President of Technology for Visa Inc., responsible
for the company's technology innovation and investment strategy, product
engineering, global IT and operations infrastructure. He joined Visa in this role in
November 2013. Prior to joining Visa, Taneja was Executive Vice President and
Chief Technology Officer of Electronic Arts Inc., from October 2011 until
November 2013. His total compensation for 2015 was $8,400,625.
Management Guidance
Management guidance has been historically accurate, leaning on the conservative
side of average over performance of expectations of 1.6%. They provide yearly
and quarterly guidance on many metrics, including free cash flow, revenue,
operating margin and EPS among others. Management has typically hit these
targets within a reasonable error of +/- 2% for the prior 3 years of guidance.
Portfolio Strategy
Visa is currently held in the Tall Firs portfolio and has been held since January
31, 2014. The purchase price was $216.22, or $52.88, adjusted for the stock split
with an implied price target of $57.57. Visa is currently trading at $76.83 a share,
representing a 45% appreciation on the investment. Visa has also paid out $1.20
of dividends per share over this period.
Given Visa’s intrinsic overvaluation, Visa is being pitched as a sell for the Tall
Firs Portfolio.
Recent News
Visa Inc (V) and Wal-Mart Stores, Inc. (WMT) Are at Each Other’s Throats
… Again - Nasdaq
Walmart is suing Visa over the signature confirmation method Visa is insisting
Walmart rely on to use for its payment confirmation. Walmart wants to require a
PIN to authorize transactions, but this results in lower fees earned by Visa. Visa
and Walmart have previously engaged in lawsuits, and the high swipe fees
continue to be a point of contingency between payment processers and
merchants.

UOIG 10
May 20th
, 2016
Prepaid
Card
Services
7%
Check
Processing
15%
ACH
Products
18%
Credit
Card
Services
22%
Debit Card
Services
38%
Figure 24: Industry Product Mix
Source: IBISWorld
Figure 25: Industry Cliental Breakdown
Source: IBISWorld
Corporate
Data security
40%
Security
Threat
Protection
40%
Cost
Reduction and
Risk
Management
20%
Catalysts
Upside
 Visa has premier market position as the biggest player in the payments
processing industry and can capitalize on the economies of scale this
industry is dependent on
 The merger with Visa Europe represents significant growth potential and
the completion of a truly global reach that could see increased synergies
for Visa and its subsidiaries.
 Visa’s early focus on e and m-commerce show a willingness by
management to adapt to a changing industry and become a leader in
digital payments
Downside
 The high regulation in this industry is poise to increase both domestically
and internationally, specifically for Visa as the face pf the industry, and
could hurt Visa’s ability to create the healthy margins it currently has
 Visa’s pending litigation with Walmart and others could result in
significant penalties and cash payouts
 The US and European markets only settle around 30% of payments in
cash or check, meaning there isn’t as much room for Visa to grow in
developed countries
Comparable Analysis
I valued Visa’s common stock using comparable companies that operate in the
credit card, mobile, and e-payments processing industry. To screen for companies,
I selected ones that hade market capitalization of at least $10 billion and operated
sin the same industry as Visa, either with similar offerings or offering a substitute
service. I then screened based of 3 year EBIT growth rates, D/E ratios, and brand
equity values. Following this, I eliminated companies that operated as commercial
banks in addition to extending credit, because they would handle debt, interest
and cash much differently than tech firms. As a result, Capital One, Discover and
Synchrony Financial were not used despite being solid comparables. The
following 4 companies are a result of this screening process and are weighted in
proportion to the number of the above metrics they fulfill.
MasterCard – MA (50%)
“MasterCard Incorporated, a technology company, provides transaction
processing and other payment-related products and services in the United States
and internationally. It facilitates the processing of payment transactions, including
authorization, clearing, and settlement, as well as delivers related products and
services. The company also offers value-added services, such as loyalty and
reward programs, and information and consulting services. In addition, it provides
cross-border and domestic processing services; and issuer and acquirer processing
solutions, and payment and mobile gateways. Further, the company offers various
payment products and solutions for cardholders, merchants, financial institutions,
and governments; programs that enable issuers to provide consumers with cards

UOIG 11
May 20th
, 2016
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
V MA AXP PYPL TSS
Revenue Growth 2016 Revenue CAGR
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
V MA AXP PYPL TSS
EBIT Margin EBITDA Margin
Figure 26: Multiples Weightings
Figure 27: Comps Revenue Projections
Figure 28: Comps Margins
Multiple Implied Price Weight
EV/Revenue 51.77 -
EV/Gross Profit 58.27 -
EV/EBIT 86.72 -
EV/EBITDA 78.23 66.67%
EV/(EBITDA-Capex) 83.53
Market Cap/Net Income = P/E 91.62 33.33%
Price Target $82.70
Current Price 77.42
Undervalued 6.82%
to defer payments; payment products and solutions that allow its customers to
access funds in deposit and other accounts; prepaid payment programs and
management services; and commercial payment products and solutions.” –
Yahoo! Finance
MasterCard is the best pure play competitor to Visa. Offering nearly identical
services in an open-loop system like Visa, MasterCard represents Visa’s biggest
and most similar competitor. Second only to Visa in size, MasterCard has similar
EBIT growth rates, D/E ratios and brand equity value, therefore warranting a 50%
weighting.
American Express – AXP (20%)
“American Express Company, together with its subsidiaries, provides charge and
credit payment card products and travel-related services to consumers and
businesses worldwide. The company’s products and services include charge and
credit card products; network services; expense management products and
services; travel-related services; and stored value/prepaid products. Its products
and services also comprise merchant acquisition and processing, servicing and
settlement, merchant financing, point-of-sale, and marketing and information
products and services for merchants; fraud prevention services; and the design of
customized customer loyalty and rewards programs. The company sells its
products and services to consumers, small businesses, mid-sized companies, and
large corporations through direct mail, online applications, in-house and third-
party sales forces, and direct response advertising.” – Yahoo! Finance
American Express represents a large-cap competitor to Visa that also operates on
a global scale. Their similar EBIT growth rates and product and service offerings
make them a near pure-play competitor. American Express does operate on a
closed-loop system, meaning they interact directly with consumers and
merchants, not the banks, which slightly distorts their risk, debt and revenue. Even
so, American Express represents an important alternative structure to Visa with
similar brand equity, warranting a 20% weighting.
PayPal Holdings – PYPL (20%)
“PayPal Holdings, Inc. operates as a technology platform company that enables
digital and mobile payments on behalf of consumers and merchants worldwide. It
enables businesses of various sizes to accept payments from merchant Websites,
mobile devices, and applications, as well as at offline retail locations through a
range of payment solutions, including PayPal, PayPal Credit, Braintree, Venmo,
and Xoom products. The company's platform allows customers to pay and get
spaid, transfer and withdraw funds to their bank accounts, and hold balances in
their PayPal accounts in various currencies.” – Yahoo! Finance
PayPal is Visa’s greatest threat in the e and m-commerce industry, and represents
the shift to these payment methods in the market. PayPal operates exclusively
over the web or phone and acts as a merchant account over the internet.
Qualitatively, PayPal competes directly with Visa in these spaces and has similar
brand equity. PayPal also has high growth rates and market capitalization,
warranting a 20% weighting.

UOIG 12
May 20th
, 2016
Figure 29: MasterCard 5-year Return
Figure 30: Visa Europe
Source: Visa Europe Online
Figure 31: American Express 5-year Return
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
Adj Close 50-Day Avg 200-Day Avg
Total System Services – TSS (10%)
“Total System Services, Inc. provides payment processing, merchant, and related
payment services to financial and nonfinancial institutions in the United States,
Europe, Canada, Mexico, and internationally. The company offers account
processing and output services, including processing the card application,
initiating service for the cardholder, processing card transaction for the issuing
retailer or financial institution, and accumulating the account’s transactions. It
also provides fraud management services to monitor the unauthorized use of
accounts; fraud detection systems for identifying fraudulent transactions; and
other services, such as customized communication services to cardholders, and
information verification services associated with granting credit, debt collection,
and customer service.” – Yahoo! Finance
Total System Services acts as a sort of middle-man between merchants and credit
card companies, helping merchants manage credit card relationships with
financial institutions. Therefore, they operate in the same industry as Visa, but
provide a different service and represent a good comparable. TSS has strong
growth margins, similar D/E ratios but are limited in size and brand equity,
warranting a 10% weighting.
Discounted Cash Flow Analysis
In order to evaluate the intrinsic value of Visa, I constructed a DCF analysis with
a projection period through a 2024 fiscal year. After determining enterprise value,
debt (less non-operating cash) was subtracted and divided by diluted shares
outstanding to obtain an implied price.
Revenue Model
Revenue was forecast based on growth assumptions for each of Visa’s revenue
segments. I was able to break down the revenue drivers for the main segments,
and was able to see past correlation with the driver and the individual revenue
segment. Then, I qualitatively projected growth for each segment based on
driver/segment correlation and my beliefs about the growth of each segment. In
the short run, my projections were in-line with management guidance. In the
longer run, I incorporated the eventual decline of data processing from regulatory
oversight and larger growth in international transaction revenues from emerging
markets and globalization. Client incentives was held constant as a percent of
revenue to be conservative in an industry where competition is increasing.
Visa Europe Acquisition
The visa Europe Acquisition was factored into the model in several ways. I
projected the acquisition to go through in Q4 of this year based on management
guidance and a conservative timetable based on current delays. Visa Europe
revenue was projected separately based on management guidance and then
trended to reflect Visa’s revenue growth as they become more efficient and
powerful under the partnership. In addition, the shares of preferred stock to be
issued in the merger were factored in the Treasury Stock Method to calculate total
shares outstanding and are dilutive in nature. The cash payment is reflected in the
DCF in Q4 of 2016 and in 2019 and reflect the euro value of the payout multiplied
by Visa’s euro currency hedge rate. Visa Europe’s PP & E are added in Q4 of

UOIG 13
May 20th
, 2016
Implied Price Undervalued/(Overvalued)
Terminal GrowthRate Terminal GrowthRate
-0.5% 0.0% 0.5% 1.0% 1.5%
0.89 73.62 76.81 80.42 84.55 89.34
0.99 67.70 70.35 73.33 76.71 80.58
1.09 62.54 64.76 67.25 70.05 73.21
1.19 58.00 59.89 61.98 64.31 66.94
1.29 53.98 55.59 57.37 59.34 61.53
AdjustedBeta
Figure 32: Beta Weightings
Figure 33: Visa Network
Figure 34: Sensitivity Analysis, Visa
Beta CashAdjusted SE Weighting
1 Year DailyBeta 1.14 1.24 0.06 0.00%
3 Year DailyBeta 1.12 1.21 0.05 50.00%
5 Year DailyBeta 1.03 1.11 0.03 30.00%
3 Year WeeklyBeta 1.07 1.15 0.10 0.00%
5 Year WeeklyBeta 1.02 1.10 0.07 0.00%
3 Year DailyHamada- Comps 1.08 1.08 20.00%
Final CashAdjustedBeta 1.15
2016 to Visa’s total PP & E and are depreciated from there. Overall, Visa Europe
has had historically lower margins than Visa and this was taken into account when
projecting based off of revenue. Visa should be able to cut costs in Visa Europe
as they adapt to Visa’s more streamlined business model and are consolidated into
a single Visa Europe unit, not beholden to European banks. Any near term
operational problems are not factored into the valuation as Visa has historically
handled mergers well and the two companies have a strong working relationship.
Any temporary increase in operational expenses or working capital requirements
should be material in nature and would not affect the overall valuation.
Beta
The beta used in my valuation was 1.15, arrived at by taking a combination of
Visa’s 3-year daily, 5-year daily and a regressed comparable beta. The benchmark
for regression was the S & P 500 index. Visa’s beta seems reasonable given its
exposure to macro-economic spending offset by a global reach. Visa’s beta is in
line with comparable companies.
Cost of Goods Sold
As Visa does not issue any physical cards, their cost of services consists of
Network and Processing fees, which is the cost to process transactions and
maintain the VisaNet system, is very low at about 4% of revenue and trended
down to 3% down due to increased economies of scale and technological
improvements.
Personnel
Personnel expenses represent Visa’s biggest cost, historically around 15% or
revenue. These expenses consist of employee salaries, share-based compensation
and incentives. I trended this upward to 17% of revenue due to completion for
talent among tech firms.
Marketing
Marketing has historically made up around 6% of revenue, and has been trending
downward since Vis’s IPO. I continued this trend into the future as Visa continues
to expand and sees reduced marginal returns on advertising for a company that
already has so much brand equity.
General & Administrative
General & Administrative consists of corporate expenses, facilities costs, travel
activities and foreign exchange gains and losses. This was trended upward due to
conservatism surrounding the strong US dollar and uncertainty in Forex markets.
Visa’s hedging has been historically poor, so this estimate represents a safety-net
for future hedging strategies.
Depreciation & Amortization
Deprecation was projected as a percentage of net PP & E using the historical
depreciable life of the underlying assets as a benchmark. Visa does not have many
tangible assets, so this includes amortization of software as well. Depreciation is
scheduled to remain fairly steady over the coming years.

UOIG 14
May 20th
, 2016
Undervalued/(Overvalued)
Terminal Growth Rate
-0.5% 0.0% 0.5% 1.0% 1.5%
0.12 (37.97%) (35.86%) (33.50%) (30.84%) (27.84%)
0.10 (29.27%) (26.80%) (24.05%) (20.96%) (17.46%)
0.08 (19.08%) (16.20%) (12.99%) (9.38%) (5.29%)
0.06 (7.11%) (3.74%) 0.03% 4.26% 9.05%
0.04 7.01% 10.97% 15.40% 20.37% 26.00%
WACC
Considerations Implied Price
Terminal Growth Rate
Avg. Industry Debt / Equity 28.57%
Avg. Industry Tax Rate 26.00%
Current Reinvestment Rate 6.06%
Reinvestment Rate in Year 2024E 5.86%
Implied Return on Capital in Perpetuity 9.10%
Terminal Value as a % of Total 61.5%
Implied 2015A EBITDA Multiple 14.1x
Implied Multiple in Year 2024E 3.8x
Free Cash Flow Growth Rate in Year 2024E 3%
Termianl Year CAPEX % of Revenue 6%
Figure 35: Sensitivity Analysis, Visa
Figure 18: Visa Final Price
Figure 36: DCF Considerations
Method Implied Price Weight
Discounted Cash Flow 62.16 80%
Forward Comparables 82.70 20%
Implied Price 66.26
Current Price 77.42
Overvalued (14.41%)
Litigation Provision
Visa has historically been involved in frequent litigation and has also paid out
significant penalties in the past, most notably $4.1 billion in 2012. Considering
they currently have pending litigation with several firms, I accounted for possible
penalties in my model by building in over $1.5 billion in possible penalties
through 2023.
Capital Expenditures
Capital expenditures has been historically low for Visa as a percentage of
Revenue and represent investments in technology assets and VisaNet
infrastructure. I believe Visa will continue to have to invest in assets in order to
account for increasing volume and to maintain state-of-the art security. Therefore,
Capital expenditures is trending slightly upward in the future.
Tax Rate
Visa’s tax rate was projected at 30% going forward. This was derived from
guidance, industry figures and market consensus. Determining Visa’s marginal
tax in countries where it records revenue was not possible due to Visa’s lack of
transparency around this and changing sales mix in revenue generating countries.
Net Working Capital
Net working capital was determined based on current assets less cash, trade and
investment securities. The receivables and payables were projected based on days’
sales outstanding and are projected to be fairly constant as a percent of revenue
with a slight downtrend in settlements. Deferred tax assets were eliminated from
calculation because Visa recently reclassified them as long-term assets. In the
same manner, tax liabilities were also netted out of the historical current liabilities
and then projected net of tax liabilities to maintain cohesiveness. Current client
incentives were projected based off their historical average ratio with client
incentive liabilities (the matching account). Customer collateral was removed
from calculation because it is an offsetting account. Visa Europe’s NWC was used
merely as a reference. Their current structure of ownership by European Banks
heavily distorts their payables and receivables
Recommendation
As a global leader in payments processing, Visa has established itself as an
excellent business with a wide economic moat. However, there is a distinction
between a good investment and a good business. Investors are overvaluing Visa
based on unrealistically high expectations about future performance. While this is
possible, the chance of litigation, merger problems, or slowing growth is a far
more likely outcome. If Visa does not maintain double digit growth for the
foreseeable future, they are likely to decline in value as investors re-evaluate their
expectations. The level of upside based on Visa’s current price is extremely slim,
and therefore should be sold. With a final price target of $66.26, Visa is
intrinsically overvalued at its current price of $77.42. My valuation warrants an
underperform rating, and therefore I recommend a sell for the Tall Firs Portfolio.

UOIG 15
University of Oregon Investment Group 5/20/16
Comparables Analysis V MA AXP PYPL TSS
($ in millions) Visa Inc Mastercard Inc
American
Express Co
PayPal Holdings,
Inc.
Total System
Services
Stock Characteristics Max Min Median Weight Avg. 50.00% 20.00% 20.00% 10.00%
Current Price $95.63 $38.98 $58.51 $73.67 $77.42 $95.63 $63.52 $38.98 $53.50
Beta 1.23 0.93 1.15 1.15 1.15 1.23 0.93 1.17 1.13
Size
Short-Term Debt 2,596.00 - 9.19 521.04 - - 2,596.00 - 18.38
Long-Term Debt 47,311.00 - 3,108.64 11,417.13 15,876.00 3,333.00 47,311.00 - 2,884.27
Cash and Cash Equivalent 25,045.00 1,932.11 3,738.50 8,165.81 15,943.00 4,894.00 25,045.00 2,583.00 1,932.11
Non-Controlling Interest 32.00 - 14.54 18.91 - 32.00 - - 29.07
Preferred Stock 1,600.00 - - 320.00 - - 1,600.00 - -
Diluted Basic Shares 2,001.99 185.85 1,018.78 994.54 2,001.99 1,083.29 954.26 1,217.29 185.85
Market Capitalization 192,165.00 9,942.80 54,032.17 75,379.45 192,165.00 105,544.61 60,614.34 47,450.01 9,942.80
Enterprise Value 192,098.00 10,942.41 65,971.67 79,490.71 192,098.00 104,015.61 87,076.34 44,867.01 10,942.41
Growth Expectations
% Revenue Growth 2016E 23.41% (2.24%) 12.16% 9.30% 11.47% 8.47% (2.24%) 15.84% 23.41%
% Revenue Growth FWRD CAGR 15.43% 0.16% 11.82% 9.67% 13.45% 10.48% 0.16% 15.43% 13.17%
% EBITDA Growth 2016E 25.89% 5.51% 10.82% 10.34% 13.47% 7.72% 5.51% 13.93% 25.89%
% EBITDA Growth FWRD CAGR 15.32% 5.87% 13.16% 11.40% 12.00% 11.42% 5.87% 14.91% 15.32%
% EPS Growth 2016E 38.52% 3.21% 9.19% 6.88% 38.52% 3.21% 3.35% 15.50% 15.04%
% EPS Growth FWRD CAGR 16.51% 5.29% 12.79% 11.91% 11.33% 12.47% 5.29% 16.51% 13.11%
Profitability Margins
Gross Margin 100.00% 38.55% 80.17% 85.92% 96.48% 100.00% 100.00% 60.35% 38.55%
EBIT Margin 67.08% 20.61% 26.80% 39.12% 67.08% 53.11% 30.87% 20.61% 22.73%
EBITDA Margin 70.10% 26.42% 34.10% 44.27% 70.10% 57.39% 34.76% 26.42% 33.43%
Net Margin 47.69% 13.33% 14.93% 25.88% 47.69% 37.22% 16.20% 13.33% 13.65%
Credit Metrics
Interest Expense $1,706.00 - $91.00 $394.20 $425.00 $87.00 $1,706.00 - $95.00
Debt/EV 0.57 - 0.15 0.16 0.08 0.03 0.57 - 0.27
Leverage Ratio 4.47 - 1.68 1.45 1.46 0.55 4.47 - 2.82
Interest Coverage Ratio 69.17 - 8.70 36.98 25.52 69.17 6.54 - 10.85
Operating Results - 2016
Revenue $32,083.00 $3,084.00 $10,599.50 $14,110.60 $15,471.90 $10,486.00 $32,083.00 $10,713.00 $3,084.00
Gross Profit $32,083.00 $1,189.00 $8,475.50 $13,071.50 $14,927.66 $10,486.00 $32,083.00 $6,465.00 $1,189.00
EBIT $10,378.24 $701.00 $3,888.50 $5,276.80 $10,378.24 $5,569.00 $9,903.00 $2,208.00 $701.00
EBITDA $11,153.00 $1,031.00 $4,424.00 $5,908.70 $10,845.26 $6,018.00 $11,153.00 $2,830.00 $1,031.00
Net Income $7,378.10 $421.00 $2,665.50 $3,318.80 $7,378.10 $3,903.00 $5,198.00 $1,428.00 $421.00
Capital Expenditures $1,786.00 $127.00 $432.00 $599.70 $498.43 $190.00 $1,786.00 $674.00 $127.00
Multiples 0 #NUM! 0
EV/Revenue 12.42x 2.71x 3.87x 6.69x 12.42x 9.92x 2.71x 4.19x 3.55x
EV/Gross Profit 12.87 2.71 8.07 7.81 12.87 9.92 2.71 6.94 9.20
EV/EBIT 20.32 8.79 17.14 16.72 18.51 18.68 8.79 20.32 15.61
EV/EBITDA 17.71 7.81 13.23 14.44 17.71 17.28 7.81 15.85 10.61
EV/(EBITDA-Capex) 20.81 9.30 14.98 16.16 18.57 17.85 9.30 20.81 12.10
Market Cap/Net Income = P/E 33.23 11.66 25.33 24.86 26.05 27.04 11.66 33.23 23.62
Appendix 1 – Relative Valuation

UOIG 16
DiscountedCash FlowAnalysis Q1 Q2 Q3 Q4
($ in millions) 2010A 2011A 2012A 2013A 2014A 2015A 12/31/2015A 3/31/2016A 6/30/2016E 9/31/2016E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E
Total Revenue $8,065.00 $9,188.00 $10,421.00 $11,778.00 $12,702.00 $13,880.00 $3,565.00 $3,626.00 $3,823.22 $4,457.68 $15,471.90 $18,546.02 $20,446.31 $22,591.48 $24,972.31 $27,258.13 $29,342.59 $31,173.26 $32,648.55
% YoY Growth 16.70% 13.92% 13.42% 13.02% 7.85% 9.27% 5.41% 6.37% 5.44% 16.60% 11.47% 19.87% 10.25% 10.49% 10.54% 9.15% 7.65% 6.24% 4.73%
Network and Processing 425.00 357.00 414.00 468.00 507.00 474.00 128.00 126.00 134.00 156.24 544.24 640.37 692.76 750.83 813.80 870.65 918.25 955.37 979.46
% Revenue 5.27% 3.89% 3.97% 3.97% 3.99% 3.41% 3.59% 3.47% 3.50% 3.50% 3.52% 3.45% 3.39% 3.32% 3.26% 3.19% 3.13% 3.06% 3.00%
Gross Profit $7,640.00 $8,831.00 $10,007.00 $11,310.00 $12,195.00 $13,406.00 $3,437.00 $3,500.00 $3,689.22 $4,301.45 $14,927.66 $17,905.64 $19,753.55 $21,840.66 $24,158.51 $26,387.47 $28,424.35 $30,217.89 $31,669.10
Gross Margin 94.73% 96.11% 96.03% 96.03% 96.01% 96.59% 96.41% 96.53% 96.50% 96.50% 96.48% 96.55% 96.61% 96.68% 96.74% 96.81% 96.87% 96.94% 97.00%
Personnel 1222.00 1459.00 1726.00 1932.00 1875.00 2,079.00 499.00 528.00 575.83 715.97 2,318.80 2,826.19 3,167.21 3,556.35 3,993.97 4,428.14 4,840.59 5,221.02 5,550.25
% Revenue 15.15% 15.88% 16.56% 16.40% 14.76% 14.98% 14.00% 14.56% 15.06% 16.06% 14.99% 15.24% 15.49% 15.74% 15.99% 16.25% 16.50% 16.75% 17.00%
Marketing 964.00 870.00 873.00 876.00 900.00 872.00 194.00 186.00 191.16 222.88 794.05 925.57 991.47 1,063.52 1,140.26 1,206.05 1,256.76 1,291.05 1,305.94
% Revenue 11.95% 9.47% 8.38% 7.44% 7.09% 6.28% 5.44% 5.13% 5.00% 5.00% 5.13% 4.99% 4.85% 4.71% 4.57% 4.42% 4.28% 4.14% 4.00%
Professional Fess 286.00 337.00 385.00 412.00 328.00 336.00 72.00 66.00 68.82 80.24 287.06 347.45 386.74 431.40 481.38 530.38 576.24 617.83 652.97
% Revenue 3.55% 3.67% 3.69% 3.50% 2.58% 2.42% 2.02% 1.82% 1.80% 1.80% 1.86% 1.87% 1.89% 1.91% 1.93% 1.95% 1.96% 1.98% 2.00%
General and Administrative Expense 359.00 414.00 451.00 451.00 507.00 547.00 156.00 164.00 172.04 189.45 681.50 877.07 1,033.26 1,214.96 1,424.01 1,642.79 1,863.60 2,081.00 2,285.40
% Revenue 4.45% 4.51% 4.33% 3.83% 3.99% 3.94% 4.38% 4.52% 4.50% 4.25% 4.40% 4.73% 5.05% 5.38% 5.70% 6.03% 6.35% 6.68% 7.00%
Depreciation and Amortization 265.00 288.00 333.00 397.00 435.00 494.00 120.00 121.00 113.04 112.98 467.02 461.82 456.63 471.50 541.85 625.14 711.41 797.11 879.95
% of PP&E Beginning Net 22.01% 21.22% 21.61% 24.30% 25.12% 26.17% 6.36% 6.42% 6.00% 6.00% 21.95% 21.71% 21.47% 21.22% 20.98% 20.73% 20.49% 20.24% 20.00%
Litigation Provision (45.00) 7.00 4,100.00 3.00 453.00 14.00 - 1.00 - - 1.00 278.19 306.69 338.87 249.72 272.58 293.43 311.73 -
% Revenue (.56%) .08% 39.34% .03% 3.57% .10% - .03% - - .01% 1.50% 1.50% 1.50% 1.00% 1.00% 1.00% 1.00% -
Earnings Before Interest & Taxes $4,589.00 $5,456.00 $2,139.00 $7,239.00 $7,697.00 $9,064.00 $2,396.00 $2,434.00 $2,568.32 $2,979.92 $10,378.24 $12,189.36 $13,411.53 $14,764.05 $16,327.32 $17,682.41 $18,882.32 $19,898.16 $20,994.58
% Revenue 56.90% 59.38% 20.53% 61.46% 60.60% 65.30% 67.21% 67.13% 67.18% 66.85% 67.08% 65.72% 65.59% 65.35% 65.38% 64.87% 64.35% 63.83% 64.30%
Other Non-Operating Income (Expense) 121.00 232.00 39.00 27.00 37.00 -69.00 272.00 139.00 38.23 44.58 493.81 185.46 204.46 225.91 249.72 272.58 293.43 311.73 326.49
% Revenue 1.58% 2.63% .39% .24% .30% .51% 7.91% 3.97% 1.00% 1.00% 3.31% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Interest Expense (Income) 72.00 32.00 (29.00) 9.00 10.00 0.00 29.00 132.00 132.00 132.00 425.00 528.00 528.00 528.00 528.00 528.00 528.00 528.00 528.00
% Revenue .89% .35% .28% .08% .08% - .81% 3.64% 3.45% 2.96% 2.75% 2.85% 2.58% 2.34% 2.11% 1.94% 1.80% 1.69% 1.62%
Earnings Before Taxes 4,638.00 5,656.00 2,207.00 7,257.00 7,724.00 8,995.00 2,639.00 2,441.00 2,474.55 2,892.50 10,447.05 11,846.82 13,088.00 14,461.97 16,049.04 17,426.99 18,647.75 19,681.89 20,793.07
% Revenue 57.51% 61.56% 21.18% 61.61% 60.81% 64.81% 74.03% 67.32% 64.72% 64.89% 67.52% 63.88% 64.01% 64.02% 64.27% 63.93% 63.55% 63.14% 63.69%
Less Taxes (Benefits) 1,674.00 2,010.00 65.00 2,277.00 2,286.00 2,667.00 698.00 734.00 754.74 882.21 3,068.95 3,489.39 3,865.17 4,282.21 4,764.66 5,187.33 5,565.24 5,889.22 6,237.92
TaxRate 36.09% 35.54% 2.95% 31.38% 29.60% 29.65% 26.45% 30.07% 30.50% 30.50% 29.38% 29.45% 29.53% 29.61% 29.69% 29.77% 29.84% 29.92% 30.00%
Net Income $2,964.00 $3,646.00 $2,142.00 $4,980.00 $5,438.00 $6,328.00 $1,941.00 $1,707.00 $1,719.81 $2,010.29 $7,378.10 $8,357.43 $9,222.83 $10,179.76 $11,284.38 $12,239.65 $13,082.50 $13,792.67 $14,555.15
Net Margin 36.75% 39.68% 20.55% 42.28% 42.81% 45.59% 54.45% 47.08% 44.98% 45.10% 47.69% 45.06% 45.11% 45.06% 45.19% 44.90% 44.59% 44.25% 44.58%
Add Back: Depreciation and Amortization 265.00 288.00 333.00 397.00 435.00 494.00 120.00 121.00 113.04 112.98 467.02 461.82 456.63 471.50 541.85 625.14 711.41 797.11 879.95
Add Back: Interest Expense*(1-TaxRate) 46.01 20.63 (28.15) 6.18 7.04 0.00 21.33 92.31 91.74 91.74 297.12 372.48 372.07 371.66 371.25 370.84 370.42 370.01 369.60
Operating Cash Flow $3,275.01 $3,954.63 $2,446.85 $5,383.18 $5,880.04 $6,822.00 $2,082.33 $1,920.31 $1,924.59 $2,215.01 $8,142.24 $9,191.74 $10,051.53 $11,022.91 $12,197.48 $13,235.63 $14,164.34 $14,959.79 $15,804.70
% Revenue 40.61% 43.04% 23.48% 45.71% 46.29% 49.15% 58.41% 52.96% 50.34% 49.69% 52.63% 49.56% 49.16% 48.79% 48.84% 48.56% 48.27% 47.99% 48.41%
Current Assets 1,918.00 2,004.00 3,714.00 2,652.00 3,153.00 2,782.00 2,026.00 2,295.00 2,240.04 2,359.86 2,359.86 2,792.78 3,080.03 3,404.38 3,764.48 4,110.51 4,426.41 4,704.23 4,928.60
% Revenue 23.78% 21.81% 35.64% 22.52% 24.82% 20.04% 56.83% 63.29% 58.59% 52.94% 15.25% 15.06% 15.06% 15.07% 15.07% 15.08% 15.09% 15.09% 15.10%
Current Liabilities 2,545.00 2,457.00 7,073.00 3,405.00 4,972.00 4,276.00 3,794.00 4,075.00 4,405.79 4,642.18 4,642.18 5,461.64 5,911.43 6,410.30 6,951.72 7,441.62 7,853.08 8,175.58 8,387.13
% Revenue 31.56% 26.74% 67.87% 28.91% 39.14% 30.81% 106.42% 112.38% 115.24% 104.14% 30.00% 29.45% 28.91% 28.37% 27.84% 27.30% 26.76% 26.23% 25.69%
Net Working Capital ($627.00) ($453.00) ($3,359.00) ($753.00) ($1,819.00) ($1,494.00) ($1,768.00) ($1,780.00) ($2,165.75) ($2,282.32) ($2,282.32) ($2,668.86) ($2,831.41) ($3,005.92) ($3,187.23) ($3,331.11) ($3,426.67) ($3,471.35) ($3,458.53)
% Revenue (7.77%) (4.93%) (32.23%) (6.39%) (14.32%) (10.76%) (49.59%) (49.09%) (56.65%) (51.20%) (14.75%) (14.39%) (13.85%) (13.31%) (12.76%) (12.22%) (11.68%) (11.14%) (10.59%)
Change in Working Capital $0.00 $174.00 ($2,906.00) $2,606.00 ($1,066.00) $325.00 ($274.00) ($12.00) ($385.75) ($116.57) ($788.32) ($386.54) ($162.55) ($174.51) ($181.32) ($143.87) ($95.56) ($44.68) $12.82
Capital Expenditures 241.00 353.00 376.00 471.00 553.00 414.00 126.00 124.00 114.70 133.73 498.43 556.38 817.85 903.66 998.89 1,090.33 1,173.70 1,558.66 1,958.91
% Revenue 2.99% 3.84% 3.61% 4.00% 4.35% 2.98% 3.53% 3.42% 3.00% 3.00% 3.22% 3.00% 4.00% 4.00% 4.00% 4.00% 4.00% 5.00% 6.00%
Acquisitions 1,805.00 268.00 3.00 - 149.00 93.00 - 14.00 - 13,811.88 13,825.88 - - 1,268.28 - - - - -
% Revenue 22.38% 2.92% .03% - 1.17% .67% - .39% - 309.84% 89.36% - - - - - - - -
UnleveredFree Cash Flow $1,229.01 $3,159.63 $4,973.85 $2,306.18 $6,244.04 $5,990.00 $2,230.33 $1,794.31 $2,195.65 ($11,614.03) ($5,393.75) $9,021.90 $9,396.22 $9,025.48 $11,379.90 $12,289.17 $13,086.20 $13,445.81 $13,832.96
DiscountedFree Cash Flow 2,149.74$ (11,133.48)$ 7,947.70$ 7,606.64$ 6,714.38$ 7,779.82$ 7,720.58$ 7,555.03$ 7,133.55$ 6,744.19$
Discount Period 0.25 0.50 1.50 2.50 3.50 4.50 5.50 6.50 7.50 8.50
Reinvestment Rate 58.09% 10.16% -139.59% 53.58% -15.23% 6.06% -26.56% -5.42% -23.01% 660.78% 173.59% -4.92% 0.58% 13.15% 0.87% 1.05% 1.21% 3.57% 5.87%
EBITDA $4,854.00 $5,744.00 $2,472.00 $7,636.00 $8,132.00 $9,558.00 $10,845.26 $12,651.18 $13,868.16 $15,235.55 $16,869.17 $18,307.54 $19,593.73 $20,695.26 $21,874.53
EBITDA Margin 60.19% 62.52% 23.72% 64.83% 64.02% 68.86% 70.10% 68.22% 67.83% 67.44% 67.55% 67.16% 66.78% 66.39% 67.00%
EBITDA Growth 18.34% (56.96%) 208.90% 6.50% 17.54% 13.47% 16.65% 9.62% 9.86% 10.72% 8.53% 7.03% 5.62% 5.70%
Appendix 2 – Discounted Cash Flows Valuation

UOIG 17
Revenue Model Segment- Visa Q1 Q2 Q3 Q4
($ in Millions) 2010A 2011A 2012A 2013A 2014A 2015A 12/31/2015A 3/31/2016A 6/30/2016E 9/31/2016E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E
Service Revenues 3497.00 4261.00 4872.00 5352.00 5797.00 6302.00 1645.00 1699.00 1766.96 1837.64 6948.60 7691.76 8539.50 9508.53 10649.55 11778.40 12862.01 13865.25 14558.51
% Growth 10.18% 21.85% 14.34% 9.85% 8.31% 8.71% 6.96% 7.74% 4.00% 4.00% 10.26% 10.70% 11.02% 11.35% 12.00% 10.60% 9.20% 7.80% 5.00%
% of Total Revenue 43.36% 46.38% 46.75% 45.44% 45.64% 45.40% 46.14% 46.86% 46.22% 46.05% 46.31% 46.54% 46.80% 47.14% 47.73% 48.30% 48.86% 49.40% 49.44%
Data Processing Revenues 3125.00 3478.00 3975.00 4642.00 5167.00 5552.00 1479.00 1473.00 1576.11 1686.44 6214.55 6910.58 7633.90 8376.93 9130.86 9861.33 10551.62 11184.72 11743.95
% Growth 28.60% 11.30% 14.29% 16.78% 11.31% 7.45% 6.94% 9.93% 7.00% 7.00% 11.93% 11.20% 10.47% 9.73% 9.00% 8.00% 7.00% 6.00% 5.00%
% of Total Revenue 38.75% 37.85% 38.14% 39.41% 40.68% 40.00% 41.49% 40.62% 41.22% 42.26% 41.42% 41.81% 41.84% 41.53% 40.92% 40.44% 40.08% 39.85% 39.88%
International Transaction Revenues 2290.00 2674.00 3025.00 3389.00 3560.00 4064.00 1031.00 1045.00 1086.80 1108.54 4271.34 4613.04 5120.48 5734.93 6423.13 7065.44 7630.67 8088.52 8492.94
% Growth 19.52% 16.77% 13.13% 12.03% 5.05% 14.16% 6.29% 8.40% 4.00% 2.00% 5.10% 8.00% 11.00% 12.00% 12.00% 10.00% 8.00% 6.00% 5.00%
% of Total Revenue 28.39% 29.10% 29.03% 28.77% 28.03% 29.28% 28.92% 28.82% 28.43% 27.78% 28.47% 27.91% 28.06% 28.43% 28.79% 28.97% 28.99% 28.82% 28.84%
Other Revenues 713.00 655.00 704.00 716.00 770.00 823.00 198.00 198.00 198.00 198.00 792.00 792.00 793.98 797.95 803.93 811.97 822.12 834.46 849.06
% Growth 14.08% (8.13%) 7.48% 1.70% 7.54% 6.88% (2.94%) (2.94%) 0.00% 0.00% (3.77%) 0.00% .25% .50% .75% 1.00% 1.25% 1.50% 1.75%
% of Total Revenue 8.84% 7.13% 6.76% 6.08% 6.06% 5.93% 5.55% 5.46% 5.18% 4.96% 5.28% 4.79% 4.35% 3.96% 3.60% 3.33% 3.12% 2.97% 2.88%
Client Incentives (1,560.00) (1,880.00) (2,155.00) (2,321.00) (2,592.00) (2,861.00) (788.00) (789.00) (804.65) (839.90) (3,221.56) (3,478.71) (3,840.44) (4,245.65) (4,695.82) (5,132.53) (5,541.03) (5,907.39) (6,196.85)
% Growth 26.42% 20.51% 14.63% 7.70% 11.68% 10.38% 10.52% 16.72% 20.10% 4.73% 12.60% 7.98% 10.40% 10.55% 10.60% 9.30% 7.96% 6.61% 4.90%
% of Total Revenue 19.34% 20.46% 20.68% 19.71% 20.41% 20.61% 22.10% 21.76% 21.05% 21.05% 21.47% 21.05% 21.05% 21.05% 21.05% 21.05% 21.05% 21.05% 21.04%
Total Revenue $8,065.00 $9,188.00 $10,421.00 $11,778.00 $12,702.00 $13,880.00 $3,565.00 $3,626.00 $3,823.22 $3,990.71 $15,004.92 $16,528.68 $18,247.41 $20,172.70 $22,311.65 $24,384.61 $26,325.40 $28,065.55 $29,447.62
% Growth 16.70% 13.92% 13.42% 13.02% 7.85% 9.27% 5.41% 6.37% 8.68% 11.75% 8.10% 10.16% 10.40% 10.55% 10.60% 9.29% 7.96% 6.61% 4.92%
Revenue Model - Visa Europe Q1 Q2 Q3 Q4
($ in Millions, Based on $/ € Exchange) 2010A 2011A 2012A 2013A 2014A 2015A 12/31/2015 3/31/2016 6/30/2016 9/31/2016 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E
Revenue 1168.17 1393.27 1421.20 1593.95 2463.86 2562.92 2727.69 2911.51 3119.90 3358.21 3609.48 3822.33 3956.52 4028.25 4093.87
% Growth -- -- -- -- -- 4.02% 6.43% 6.74% 7.16% 7.64% 7.48% 5.90% 3.51% 1.81% 1.63%
% of Total Revenue 121.85% -- -- -- 142.77% 146.95% 146.03% 144.32% 141.88% 138.84% 135.66% 133.02% 131.13% 129.62% 127.90%
Client Incentives (209.49) 0.00 0.00 0.00 (738.05) (818.85) (859.79) (894.18) (921.01) (939.43) (948.82) (948.82) (939.33) (920.54) (892.93)
% Growth -- -- -- -- N/A 10.95% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% (1.00%) (2.00%) (3.00%)
% of Total Revenue 21.85% -- -- -- 42.77% 46.95% 46.03% 44.32% 41.88% 38.84% 35.66% 33.02% 31.13% 29.62% 27.90%
Total Revenue $958.67 $1,393.27 $1,421.20 $1,593.95 $1,725.81 $1,744.07 $1,867.90 $2,017.33 $2,198.89 $2,418.78 $2,660.66 $2,873.52 $3,017.19 $3,107.71 $3,200.94
% Growth N/A 45.33% 2.00% 12.16% 8.27% 1.06% 5.00% 8.00% 9.00% 10.00% 10.00% 8.00% 5.00% 3.00% 3.00%
Revenue Model by Segment (Visa)
Revenue Model by Segment (Visa Europe)
Appendix 3 – Revenue Model

UOIG 18
Revenue Model Driver - Service Revenues Q1 Q2 Q3 Q4
(Payments Volume $ in Billions) 2010A 2011A 2012A 2013A 2014A 2015A 12/31/2015 3/31/2016 6/30/2016 9/31/2016 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E
Asia Pacific - Payments Volume 801.00 991.00 1112.00 1227.00 1356.00 1437.00 387.00 378.00 389.40 396.89 1551.29 1678.63 1820.73 1979.51 2157.20 2356.36 2579.94 2831.33 3114.46
% Growth N/A 23.72% 12.21% 10.34% 10.51% 5.97% 7.80% 10.20% 6.98% 6.98% 7.95% 8.21% 8.46% 8.72% 8.98% 9.23% 9.49% 9.74% 10.00%
% of Volume 25.45% 26.99% 28.24% 28.58% 28.97% 29.14% 29.66% 30.14% 29.28% 29.58% 29.66% 30.17% 30.74% 31.41% 32.21% 33.16% 34.30% 35.64% 37.19%
Canada - Payments Volume 187.00 211.00 219.00 232.00 235.00 222.00 55.00 46.00 53.23 50.43 204.66 191.19 180.95 173.47 168.43 165.61 164.86 166.13 169.46
% Growth N/A 12.83% 3.79% 5.94% 1.29% (5.53%) (11.29%) (6.12%) (6.61%) (6.61%) (7.81%) (6.58%) (5.36%) (4.13%) (2.90%) (1.68%) (.45%) .77% 2.00%
% of Volume 5.94% 5.75% 5.56% 5.40% 5.02% 4.50% 4.21% 3.67% 4.00% 3.76% 3.91% 3.44% 3.06% 2.75% 2.51% 2.33% 2.19% 2.09% 2.02%
CEMEA - Payments Volume 97.00 132.00 171.00 213.00 253.00 241.00 60.00 57.00 58.88 58.88 234.75 230.02 226.70 224.72 224.06 224.68 226.60 229.83 234.43
% Growth N/A 36.08% 29.55% 24.56% 18.78% (4.74%) (7.69%) 5.56% (3.48%) (3.48%) (2.59%) (2.02%) (1.44%) (.87%) (.30%) .28% .85% 1.43% 2.00%
% of Volume 3.08% 3.59% 4.34% 4.96% 5.41% 4.89% 4.60% 4.55% 4.43% 4.39% 4.49% 4.13% 3.83% 3.57% 3.35% 3.16% 3.01% 2.89% 2.80%
LAC - Payments Volume 253.00 333.00 365.00 401.00 411.00 376.00 89.00 79.00 79.01 75.46 322.47 283.11 254.29 233.57 219.28 210.32 205.98 205.92 210.04
% Growth N/A 31.62% 9.61% 9.86% 2.49% (8.52%) (18.35%) (15.05%) (11.22%) (11.22%) (14.24%) (12.21%) (10.18%) (8.15%) (6.12%) (4.09%) (2.06%) (.03%) 2.00%
% of Volume 8.04% 9.07% 9.27% 9.34% 8.78% 7.63% 6.82% 6.30% 5.94% 5.62% 6.17% 5.09% 4.29% 3.71% 3.27% 2.96% 2.74% 2.59% 2.51%
US - Payments Volume 1809.00 2005.00 2070.00 2220.00 2425.00 2655.00 714.00 694.00 749.18 760.15 2917.34 3180.50 3440.05 3691.19 3928.91 4148.16 4343.96 4511.64 4646.99
% Growth N/A 10.83% 3.24% 7.25% 9.23% 9.48% 9.68% 10.51% 9.69% 9.69% 9.88% 9.02% 8.16% 7.30% 6.44% 5.58% 4.72% 3.86% 3.00%
% of Volume 57.48% 54.60% 52.58% 51.71% 51.82% 53.84% 54.71% 55.34% 56.34% 56.65% 55.78% 57.17% 58.08% 58.57% 58.66% 58.38% 57.76% 56.79% 55.48%
Total Payments Volume 3147.00 3672.00 3937.00 4293.00 4680.00 4931.00 1305.00 1254.00 1329.70 1341.81 5230.51 5563.44 5922.71 6302.46 6697.89 7105.13 7521.34 7944.86 8375.38
% Growth N/A 16.68% 7.22% 9.04% 9.01% 5.36% 4.74% 7.46% 6.04% 6.16% 6.07% 6.37% 6.46% 6.41% 6.27% 6.08% 5.86% 5.63% 5.42%
Revenue Model Driver - Data Processing Revenues Q1 Q2 Q3 Q4
Payments Transactions in Millions 2010A 2011A 2012A 2013A 2014A 2015A 12/31/2015 3/31/2016 6/30/2016 9/31/2016 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E
Asia Pacific 10262.00 11021.00 11950.00 13291.00 15071.00 17336.00 4900.00 4749.00 5075.61 5387.50 20112.11 23131.31 26372.05 29802.65 33380.98 37054.59 40761.30 44430.51 47984.95
% Growth N/A 7.40% 8.43% 11.22% 13.39% 15.03% 17.06% 16.06% 15.51% 15.51% 16.01% 15.01% 14.01% 13.01% 12.01% 11.01% 10.00% 9.00% 8.00%
% of Total Transactions 18.26% 17.58% 18.06% 18.36% 18.87% 19.44% 19.91% 19.82% 19.88% 20.26% 19.97% 20.48% 20.97% 21.46% 21.97% 22.50% 23.09% 23.74% 24.46%
Canada 1701.00 1849.00 1998.00 2220.00 2434.00 2651.00 723.00 656.00 738.36 760.11 2877.47 3103.36 3325.47 3540.44 3744.78 3934.96 4107.54 4259.23 4387.00
% Growth N/A 8.70% 8.06% 11.11% 9.64% 8.92% 7.75% 8.97% 8.74% 8.74% 8.54% 7.85% 7.16% 6.46% 5.77% 5.08% 4.39% 3.69% 3.00%
CEMEA 1522.00 2058.00 2861.00 4017.00 5358.00 6937.00 2099.00 2186.00 2327.67 2510.44 9123.10 11672.96 14519.45 17542.55 20569.83 23386.39 25755.06 27445.67 28269.04
% Growth N/A 35.22% 39.02% 40.41% 33.38% 29.47% 29.89% 35.36% 30.55% 30.55% 31.51% 27.95% 24.39% 20.82% 17.26% 13.69% 10.13% 6.56% 3.00%
LAC 6106.00 7295.00 8320.00 9265.00 9774.00 10529.00 2914.00 2795.00 2808.74 2931.05 11448.79 12388.31 13339.34 14292.75 15238.62 16166.41 17065.09 17923.38 18729.93
% Growth N/A 19.47% 14.05% 11.36% 5.49% 7.72% 8.05% 10.52% 8.24% 8.24% 8.74% 8.21% 7.68% 7.15% 6.62% 6.09% 5.56% 5.03% 4.50%
US 36601.00 40466.00 41050.00 43616.00 47250.00 51706.00 13970.00 13570.00 14577.78 15007.74 57125.52 62650.26 68201.73 73692.57 79028.44 84110.38 88837.68 93110.93 96835.37
% Growth N/A 10.56% 1.44% 6.25% 8.33% 9.43% 10.92% 11.17% 9.96% 9.96% 10.48% 9.67% 8.86% 8.05% 7.24% 6.43% 5.62% 4.81% 4.00%
Total Transactions 56192.00 62689.00 66179.00 72409.00 79887.00 89159.00 24606.00 23956.00 25528.17 26596.83 100686.99 112946.20 125758.04 138870.96 151962.66 164652.73 176526.67 187169.72 196206.29
% Growth N/A 11.56% 5.57% 9.41% 10.33% 11.61% 13.05% 13.84% 12.42% 12.50% 12.93% 12.18% 11.34% 10.43% 9.43% 8.35% 7.21% 6.03% 4.83%
Revenue Model Driver - International Transactions Q1 Q2 Q3 Q4
(Cross Border Volume) 2010A 2011A 2012A 2013A 2014A 2015A 12/31/2015 3/31/2016 6/30/2016 9/31/2016 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E
Nominal % Growth 16.00% 18.00% 11.00% 10.00% 8.00% 0.00% (4.00%) 0.00% 2.00% 4.00% 6.00% 10.00% 11.00% 12.00% 10.00% 8.00% 8.00% 8.00% 5.00%
Revenue Model Drivers for Segments
(Illustrative)
Appendix 3 – Revenue Model Continued

UOIG 19
Working Capital Model Q1 Q2 Q3 Q4
($ in millions) 2010A 2011A 2012A 2013A 2014A 2015A 12/31/2015A 3/31/2016A 6/30/2016E 9/31/2016E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E
Total Revenue $8,065.00 $9,188.00 $10,421.00 $11,778.00 $12,702.00 $13,880.00 $3,565.00 $3,626.00 $3,823.22 $3,990.71 $15,471.90 $18,546.02 $20,446.31 $22,591.48 $24,972.31 $27,258.13 $29,342.59 $31,173.26 $32,648.55
Current Assets
Settlements Recievable 402.00 412.00 454.00 799.00 786.00 408.00 443.00 414.00 452.55 494.07 494.07 575.36 615.72 659.78 706.60 746.49 776.89 797.01 805.03
Days Sales Outstanding S/R 18.19 16.37 15.95 24.76 22.59 10.73 11.18 10.39 10.89 11.39 11.66 11.32 10.99 10.66 10.33 10.00 9.66 9.33 9.00
% of Revenue 4.98% 4.48% 4.36% 6.78% 6.19% 2.94% 12.43% 11.42% 11.84% 12.38% 3.19% 3.10% 3.01% 2.92% 2.83% 2.74% 2.65% 2.56% 2.47%
Accounts Receivable 476.00 560.00 723.00 761.00 822.00 847.00 922.00 944.00 969.54 1012.02 1012.02 1185.45 1306.92 1444.04 1596.22 1742.33 1875.57 1992.58 2086.88
Days Sales Outstanding A/R 21.54 22.25 25.39 23.58 23.62 22.27 23.28 23.69 23.33 23.33 23.87 23.33 23.33 23.33 23.33 23.33 23.33 23.33 23.33
% of Revenue 5.90% 6.09% 6.94% 6.46% 6.47% 6.10% 25.86% 26.03% 25.36% 25.36% 6.54% 6.39% 6.39% 6.39% 6.39% 6.39% 6.39% 6.39% 6.39%
Current Client Incentives 175.00 278.00 209.00 282.00 210.00 303.00 414.00 291.00 345.06 360.18 360.18 521.12 594.20 678.29 773.81 870.88 965.73 1055.99 1137.40
% of Revenue 2.17% 3.03% 2.01% 2.39% 1.65% 2.18% 11.61% 8.03% 9.03% 9.03% 2.33% 2.81% 2.91% 3.00% 3.10% 3.19% 3.29% 3.39% 3.48%
Prepaid Expenses and Other 242.00 265.00 301.00 329.00 307.00 353.00 247.00 646.00 472.88 493.60 493.60 510.84 563.18 622.27 687.85 750.81 808.23 858.65 899.29
Days Prepaid Expense Outstanding 10.95 10.53 10.57 10.20 8.82 9.28 6.24 16.21 11.38 11.38 11.64 10.05 10.05 10.05 10.05 10.05 10.05 10.05 10.05
% of Revenue 3.00% 2.88% 2.89% 2.79% 2.42% 2.54% 6.93% 17.82% 12.37% 12.37% 3.19% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75%
Deferred TaxAssets 623.00 489.00 2027.00 481.00 1028.00 871.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
% of Revenue 7.72% 5.32% 19.45% 4.08% 8.09% 6.28% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total Current Assets $1,918.00 $2,004.00 $3,714.00 $2,652.00 $3,153.00 $2,782.00 $2,026.00 $2,295.00 $2,240.04 $2,359.86 $2,359.86 $2,792.78 $3,080.03 $3,404.38 $3,764.48 $4,110.51 $4,426.41 $4,704.23 $4,928.60
% of Revenue 23.78% 21.81% 35.64% 22.52% 24.82% 20.04% 56.83% 63.29% 58.59% 59.13% 15.25% 15.06% 15.06% 15.07% 15.07% 15.08% 15.09% 15.09% 15.10%
Long Term Assets
Net PP&E Beginning 1204.00 1357.00 1541.00 1634.00 1732.00 1888.00 1888.00 1884.00 1883.00 1884.66 2127.27 2127.27 2221.83 2583.05 3015.21 3472.26 3937.45 4399.74 5161.29
Capital Expenditures 241.00 353.00 376.00 471.00 553.00 414.00 126.00 124.00 114.70 133.73 498.43 556.38 817.85 903.66 998.89 1090.33 1173.70 1558.66 1958.91
Acquisitions 1805.00 268.00 3.00 0.00 149.00 93.00 0.00 14.00 0.00 13811.88 13825.88 0.00 0.00 1268.28 0.00 0.00 0.00 0.00 0.00
Depreciation and Amortization 265.00 288.00 333.00 397.00 435.00 494.00 120.00 121.00 113.04 194.94 548.98 461.82 456.63 471.50 541.85 625.14 711.41 797.11 879.95
Net PP&E Ending 1357.00 1541.00 1634.00 1732.00 1892.00 1888.00 1884.00 1883.00 1884.66 2127.27 2127.27 2221.83 2583.05 3015.21 3472.26 3937.45 4399.74 5161.29 6240.26
Total Current Assets & Net PP&E $3,275.00 $3,545.00 $5,348.00 $4,384.00 $5,045.00 $4,670.00 $3,910.00 $4,178.00 $4,124.69 $4,487.13 $4,487.13 $5,014.61 $5,663.08 $6,419.59 $7,236.74 $8,047.96 $8,826.15 $9,865.52 $11,168.86
% of Revenue 40.61% 38.58% 51.32% 37.22% 39.72% 33.65% 109.68% 115.22% 107.89% 112.44% 29.00% 27.04% 27.70% 28.42% 28.98% 29.52% 30.08% 31.65% 34.21%
Current Liabilities
Accounts Payable 137.00 169.00 152.00 184.00 147.00 127.00 118.00 90.00 114.92 119.95 119.95 140.51 154.90 171.16 189.19 206.51 222.30 236.17 247.35
Days Sales Outstanding 6.20 6.71 5.34 5.70 4.22 3.34 2.98 2.26 2.77 2.77 2.83 2.77 2.77 2.77 2.77 2.77 2.77 2.77 2.77
% of Revenue 1.70% 1.84% 1.46% 1.56% 1.16% .91% 3.31% 2.48% 3.01% 3.01% .78% .76% .76% .76% .76% .76% .76% .76% .76%
Settlements Payable 406.00 449.00 719.00 1225.00 1332.00 780.00 744.00 723.00 795.59 873.83 873.83 1030.84 1118.16 1215.24 1320.95 1417.46 1499.58 1565.22 1610.07
Days Sales Outstanding 18.37 17.84 25.25 37.96 38.28 20.51 18.78 18.14 19.14 20.14 20.61 20.29 19.96 19.63 19.31 18.98 18.65 18.33 18.00
% of Revenue 5.03% 4.89% 6.90% 10.40% 10.49% 5.62% 20.87% 19.94% 20.81% 21.90% 5.65% 5.56% 5.47% 5.38% 5.29% 5.20% 5.11% 5.02% 4.93%
Accrued Compensation and Benefits 370.00 387.00 460.00 523.00 450.00 503.00 317.00 376.00 412.28 430.34 430.34 520.91 579.87 646.88 721.88 795.40 864.24 926.68 979.46
% of Revenue 4.59% 4.21% 4.41% 4.44% 3.54% 3.62% 8.89% 10.37% 10.78% 10.78% 2.78% 2.81% 2.84% 2.86% 2.89% 2.92% 2.95% 2.97% 3.00%
Cient Incentives 418.00 528.00 830.00 919.00 1036.00 1049.00 1116.00 1132.00 1270.03 1325.67 1325.67 1645.44 1876.19 2141.71 2443.32 2749.83 3049.30 3334.30 3591.34
% of Revenue 5.18% 5.75% 7.96% 7.80% 8.16% 7.56% 31.30% 31.22% 33.22% 33.22% 8.57% 8.87% 9.18% 9.48% 9.78% 10.09% 10.39% 10.70% 11.00%
Current Accrued Liabilities 583.00 499.00 526.00 549.00 551.00 793.00 487.00 741.00 744.87 777.50 777.50 931.40 1026.19 1133.14 1251.77 1365.49 1468.98 1559.65 1632.43
% of Revenue 7.23% 5.43% 5.05% 4.66% 4.34% 5.71% 13.66% 20.44% 19.48% 19.48% 5.03% 5.02% 5.02% 5.02% 5.01% 5.01% 5.01% 5.00% 5.00%
Current Accrued Litigation 631.00 425.00 4386.00 5.00 1456.00 1024.00 1012.00 1013.00 1068.10 1114.89 1114.89 1192.54 1156.12 1102.17 1024.60 906.94 748.67 553.56 326.49
% of Revenue 7.82% 4.63% 42.09% .04% 11.46% 7.38% 28.39% 27.94% 27.94% 27.94% 7.21% 6.43% 5.65% 4.88% 4.10% 3.33% 2.55% 1.78% 1.00%
Total Current Liabilities $2,545.00 $2,457.00 $7,073.00 $3,405.00 $4,972.00 $4,276.00 $3,794.00 $4,075.00 $4,405.79 $4,642.18 $4,642.18 $5,461.64 $5,911.43 $6,410.30 $6,951.72 $7,441.62 $7,853.08 $8,175.58 $8,387.13
% of Revenue 31.56% 26.74% 67.87% 28.91% 39.14% 30.81% 106.42% 112.38% 115.24% 116.32% 30.00% 29.45% 28.91% 28.37% 27.84% 27.30% 26.76% 26.23% 25.69%
Appendix 4 – Working Capital Model

UOIG 20
DiscountedFree Cash FlowAssumptions Considerations
TaxRate 30.00% Terminal Growth Rate 0.57%
Risk Free Rate 1.93% Terminal Value 153,297 Avg. Industry Debt / Equity 28.67%
Beta 1.15 PVof Terminal Value 74,739 Avg. Industry TaxRate 26.00%
Market Risk Premium 6.45% Sumof PVFree Cash Flows 50,218 Current Reinvestment Rate 6.06%
% Equity 92.38% FirmValue 124,957 Reinvestment Rate in Year 2024E 5.87%
% Debt 7.62% Total Debt 15,876 Implied Return on Capital in Perpetuity 9.64%
Cost of Debt 2.94% Cash & Cash Equivalents 15,943 Terminal Value as a % of Total 59.8%
CAPM 9.38% Operating Cash Estimate 589 Implied 2015A EBITDA Multiple 13.1x
WACC 8.82% Non-Operating Cash 15,354 Implied Multiple in Year 2024E 3.4x
Terminal Risk Free Rate 2.82% Market Capitalization 124,435 Free Cash Flow Growth Rate in Year 2024E 3%
Terminal CAPM 10.27% Fully Diluted Shares 2,002 Termianl Year CAPEX % of Revenue 6%
Terminal WACC 9.64% Implied Price 62.16
Current Price 77.42
Overvalued (19.72%)
Method Implied Price Weight
Discounted Cash Flow 62.16 80%
Forward Comparables 82.70 20%
Implied Price 66.26
Current Price 77.42
Overvalued (14.41%)
Appendix 5 – Discounted Cash Flows Valuation Assumptions

UOIG 21
Appendix 6 –Sensitivity Analysis
Terminal Growth Rate Terminal Growth Rate
-0.5% 0.0% 0.5% 1.0% 1.5% -0.5% 0.0% 0.5% 1.0% 1.5%
0.89 73.62 76.81 80.42 84.55 89.34 0.89 (4.20%) (0.06%) 4.64% 10.03% 16.25%
0.99 67.70 70.35 73.33 76.71 80.58 0.99 (11.90%) (8.46%) (4.58%) (0.18%) 4.85%
1.09 62.54 64.76 67.25 70.05 73.21 1.09 (18.62%) (15.73%) (12.49%) (8.85%) (4.74%)
1.19 58.00 59.89 61.98 64.31 66.94 1.19 (24.53%) (22.07%) (19.35%) (16.31%) (12.90%)
1.29 53.98 55.59 57.37 59.34 61.53 1.29 (29.76%) (27.66%) (25.35%) (22.79%) (19.93%)
-0.5% 0.0% 0.5% 1.0% 1.5% -0.5% 0.0% 0.5% 1.0% 1.5%
0.28 18.43 18.95 19.54 20.20 20.94 0.12 (37.97%) (35.86%) (33.50%) (30.84%) (27.84%)
0.18 32.73 33.78 34.94 36.25 37.74 0.10 (29.27%) (26.80%) (24.05%) (20.96%) (17.46%)
0.08 62.19 64.40 66.87 69.64 72.79 0.08 (19.08%) (16.20%) (12.99%) (9.38%) (5.29%)
0.18 32.73 33.78 34.94 36.25 37.74 0.06 (7.11%) (3.74%) 0.03% 4.26% 9.05%
0.28 18.43 18.95 19.54 20.20 20.94 0.04 7.01% 10.97% 15.40% 20.37% 26.00%
-0.5% 0.0% 0.5% 1.0% 1.5% -0.5% 0.0% 0.5% 1.0% 1.5%
2097.00 59.55 61.67 64.04 66.70 69.71 2097.00 -22.51% -19.75% -16.67% -13.21% -9.29%
2047.00 61.00 63.18 65.60 68.32 71.41 2047.00 -20.62% -17.79% -14.64% -11.09% -7.08%
1997.00 62.53 64.76 67.24 70.04 73.20 1997.00 -18.63% -15.74% -12.50% -8.87% -4.75%
1947.00 64.14 66.42 68.97 71.83 75.08 1947.00 -16.54% -13.57% -10.26% -6.53% -2.31%
1897.00 65.83 68.17 70.79 73.73 77.06 1897.00 -14.34% -11.29% -7.89% -4.06% 0.27%
-0.5% 0.0% 0.5% 1.0% 1.5% -0.5% 0.0% 0.5% 1.0% 1.5%
0.45 62.80 65.05 67.56 70.38 73.57 0.45 -18.28% -15.36% -12.09% -8.42% -4.26%
0.35 62.62 64.85 67.34 70.15 73.32 0.35 -18.52% -15.62% -12.37% -8.72% -4.59%
0.30 62.53 64.75 67.24 70.03 73.19 0.30 -18.64% -15.74% -12.51% -8.87% -4.76%
0.25 62.44 64.65 67.13 69.91 73.07 0.25 -18.76% -15.87% -12.65% -9.02% -4.92%
0.35 62.62 64.85 67.34 70.15 73.32 0.35 -18.52% -15.62% -12.37% -8.72% -4.59%
AdjustedBeta
AdjustedBeta
WACC
WACC
DilutedShares
DilutedShares
TaxRate
TaxRate

UOIG 22
Appendix 8 – Sources
Visa SEC Filings
FactSet
FinViz
Visa Investor Relations
IBISWorld
Visa Earnings Calls
S&P Capital IQ
Visa Press Releases
Visa Investor Presentations
CreditCard Hub
ECB Online
NASDAQ
University of Oregon Presentation Materials

VISA Report - Revised

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