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Behind Visa’s Total Operating Expenses

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YoY decline

In fiscal 2017, Visa (V) incurred total operating expenses of $6.2 billion compared to $7.1 billion in fiscal 2016—a fall of 14%. Between fiscal 2016 and fiscal 2017, the company saw an 18% rise in personnel expenses on the back of a rise in its number of employees and a rise in incentive compensation.

Visa incurred marketing expenses of $922 million in fiscal 2017 compared to $869 million in fiscal 2016—a rise of 6%. The company incurred these expenses on marketing campaigns and other promotional activities.

Visa saw a rise in network and processing expenses from $538 million in fiscal 2016 to $620 million in fiscal 2017, implying a rise of 15%.

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Depreciation and amortization expenses

Visa incurred professional fees amounting to $409 million in fiscal 2017 compared to $389 million in fiscal 2016, implying a rise of 5%. The company’s depreciation and amortization expenses amounted to $556 million in fiscal 2017, while in fiscal 2016, they stood at $502 million. The change reflected a rise of 11% mainly due to ongoing deployments with respect to infrastructure and technology assets.

Visa saw a substantial rise in general and administrative expenses from $796 million in fiscal 2016 to $1.1 billion in fiscal 2017.

Visa has a return on invested capital of 15.6% on a trailing-12-month basis. Its peers (XLF) Fiserv (FISV), Total System Services (TSS), and Global Payments (GPN) have returns on invested capital of 13.3%, 9.7%, and 6.6%, respectively, on a trailing-12-month basis.

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