Visa Inc. (NYSE: V) announced financial results for the Company’s fiscal second quarter 2012 ended March 31, 2012. GAAP net income for the quarter, inclusive of a one-time non-cash benefit related to the re-measurement of existing net deferred tax liabilities was $1.3 billion.
On an adjusted basis, excluding this non-cash benefit, net income for the quarter was $1.1 billion, an increase of 23% over the prior year, and diluted class A common stock earnings per share were $1.60, an increase of 30% over the prior year. The weighted-average number of diluted class A common stock outstanding was approximately 676 million. The Company’s adjusted quarterly net income per share of class A common stock is a non-GAAP financial measure that is reconciled to its most directly comparable GAAP measure in the accompanying financial tables.
GAAP net operating revenue in the fiscal second quarter of 2012 was $2.6 billion, an increase of 15% over the prior year and driven by strong double-digit growth in service revenues, data processing revenues and international transaction revenues.
“Our strong financial performance this quarter was fueled by continued growth of U.S. credit products, strong cross border spending and expansion of Visa’s core business in international markets,” said Joseph Saunders, Chairman and Chief Executive Officer, Visa Inc. “Across the globe Visa’s business continues to expand at a healthy pace, the result of our commitment to continued expansion in our core business as well as our ability to leverage innovative payment technologies.”
Fiscal Second Quarter 2012 Financial Highlights:
Payments volume growth, on a constant dollar basis, for the three months ended December 31, 2011, on which fiscal second quarter service revenue is recognized, was a positive 11% over the prior year at $993 billion.
Payments volume growth, on a constant dollar basis, for the three months ended March 31, 2012, was a positive 11% over the prior year at $956 billion.
Cross-border volume growth, on a constant dollar basis, was a positive 16% for the three months ended March 31, 2012.
Total processed transactions, which represent transactions processed by VisaNet, for the three months ended March 31, 2012, were 13 billion, a positive 8% increase over the prior year.
Fiscal second quarter 2012 service revenues were $1.2 billion, an increase of 13% versus the prior year, and are recognized based on payments volume in the prior quarter. All other revenue categories are recognized based on current quarter activity. Data processing revenues rose 12% over the prior year to $922 million. International transaction revenues, which are driven by cross-border activity, grew 17% over the prior year to $733 million. Other revenues, which include the Visa Europe licensing fee, were $179 million, a 14% increase over the prior year. Client incentives, which are a contra revenue item, were $497 million and represent 16% of gross revenues.
Total operating expenses were $972 million for the quarter, a 13% increase over the prior year, primarily due to higher personnel costs associated with acquisitions and investments in technology projects to support our growth initiatives.
Cash, cash equivalents, restricted cash, and available-for-sale investment securities were $8.9 billion at March 31, 2012.
Visa’s GAAP effective tax rate was 19.7% for the quarter ended March 31, 2012. On an adjusted basis, the effective tax rate was 32.6%.
Notable Event:
As announced on April 26, 2012, the Board of Directors declared a quarterly dividend in the aggregate amount of $0.22 per share of class A common stock (determined in the case of class B and class C common stock on an as-converted basis) payable on June 5, 2012, to all holders of record of the Company’s class A, class B and class C common stock as of May 18, 2012.
Financial Outlook:
Visa Inc. updates its financial outlook for the following metric through 2012:
• Adjusted annual diluted class A common stock earnings per share growth: High teens to low twenties.
Visa Inc. affirms its financial outlook for the following metrics for 2012:
• Annual net revenue growth in the low double digits;
• Client incentives as a percent of gross revenues: 17% to 18% range;
• Marketing expenses: Under $1 billion;
• Annual operating margin of about 60%;
• Adjusted tax rate: 33% to 34% range*;
• Capital expenditures $350 million to $400 million range; and
• Annual free cash flow greater than $4 billion.
* Financial Outlook excludes the impact of a non-cash benefit related to the re-measurement of deferred tax liabilities, which would decrease the GAAP tax rate to 29 to 30%. These deferred tax liabilities are primarily associated with indefinite-lived intangible assets recorded as part of Visa’s October 2007 reorganization.
