Components of revenues
The components of Visa’s (V) gross revenues consist of international transaction revenues, service revenues, data processing revenues, and other revenues. The company arrives at its net operating revenues after the deduction of client incentives.
Visa witnessed a substantial rise of 18% in services revenues in fiscal 2017 compared to fiscal 2016. It posted service revenues of $7.9 billion in fiscal 2017 versus $6.7 billion in fiscal 2016. It generates its service revenues mainly from payments volume. There is a direct relationship between payment volumes and service revenues.
On an LTM (last 12-month) basis, Visa generated EBITDA (earnings before interest, tax, depreciation, and amortization) of $12.7 billion. Its competitors (XLF) Fiserv (FISV), Total System Services (TSS), and Vantiv (VNTV) generated EBITDA of $1.8 billion, $1.1 billion, and $0.9 billion, respectively.
Data processing revenues
Visa gets its data processing revenues mainly from processed transactions. For example, a rise in processed transactions would lead to a rise in data processing revenues. In fiscal 2017, the company had data processing revenues of $7.7 billion compared to $6.2 billion in fiscal 2016, implying a rise of 24%.
Visa generated international transaction revenues of $6.3 billion in fiscal 2017 compared to $4.6 billion in fiscal 2016, implying a substantial 36% increase. However, a marginal 2% rise was seen in other revenues in fiscal 2017 compared to fiscal 2016.
Visa incurred client incentives of $4.5 billion in fiscal 2017 compared to $3.4 billion in fiscal 2016, which reflects a rise of 34%.