Visa Inc. (NYSE: V) today announced financial results for the Company’s fiscal second quarter 2013 ended March 31, 2013.
Net income for the quarter was $1.3 billion or $1.92 per share, an increase of 17% and 20%, respectively, over the prior year adjusted results. The prior year results were adjusted to exclude a one-time non-cash benefit of $208 million related to the remeasurement of net deferred tax liabilities taken in the fiscal second quarter of 2012.
On a GAAP basis, net income for the quarter decreased 2% and diluted earnings per share increased 1% over the prior year. All references to earnings per share assume fully-diluted class A share count unless otherwise noted. 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.
Net operating revenue in the fiscal second quarter of 2013 was $3.0 billion, an increase of 15% over the prior year, driven by strong growth in service revenues, data processing revenues and international transaction revenues. There was no significant impact on current quarter results related to the strengthening or weakening of the U.S. dollar over the prior year.
“Visa’s strong financial and operational performance reflects continued momentum across our core business during the fiscal second quarter,” said Charlie Scharf, Chief Executive Officer. “To drive future transaction growth, we continue to invest in new technologies, channels and capabilities to make Visa transactions more valuable, accessible and secure. Looking ahead, we will continue to evolve our business practices to better support clients of all sizes.”
Fiscal Second Quarter 2013 Financial Highlights:
Payments volume growth, on a constant dollar basis, for the three months December 31, 2012, on which fiscal second quarter service revenue is recognized, was 9% over the prior year at $1.1 trillion.
Payments volume growth, on a constant dollar basis, for the three months ended March 31, 2013, was 9% over the prior year at $1.0 trillion.
Cross-border volume growth, on a constant dollar basis, was 10% for the three months ended March 31, 2013.
Total processed transactions, which represent transactions processed by VisaNet, for the three months ended March 31, 2013, were 13.9 billion, a 6% increase over the prior year.
Fiscal second quarter 2013 service revenues were $1.4 billion, an increase of 10% 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 25% over the prior year to $1.2 billion. International transaction revenues, which are driven by cross-border activity, grew 13% over the prior year to $831 million. Other revenues, which include the Visa Europe licensing fee, were $175 million, a 2% decrease over the prior year. Client incentives, which are a contra revenue item, were $567 millionand represent 16% of gross revenues.
Total operating expenses were $1.1 billion for the quarter, a 13% increase over the prior year, primarily due to personnel, marketing and network and processing fees associated with investments in technology projects to support our global growth initiatives.
The effective tax rate was 32% for the quarter ended March 31, 2013.
Cash, cash equivalents, and available-for-sale investment securities were $5.6 billion at March 31, 2013.
The weighted-average number of diluted class A common stock outstanding was 660 million for the quarter ended March 31, 2013.
Notable Events:
During the three months ended March 31, 2013, the Company repurchased 12 million shares of class A common stock, at an average price of $157.24 per share, using $1.8 billion of cash on hand. The Company has $1.0 billion of remaining funds authorized by the board of directors available for share repurchase.
As announced on April 24, 2013 the Board of Directors declared a quarterly dividend in the aggregate amount of $0.33 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 4, 2013, to all holders of record of the Company’s class A, class B and class C common stock as of May 17, 2013.
Financial Outlook:
Visa Inc. updates its financial outlook for the following metric for fiscal 2013:
• Client incentives as a percent of gross revenues: 16% to 17% range; and
• Adjusted annual diluted class A common stock earnings per share growth: Around 20%.
Visa Inc. affirms its financial outlook for the following metrics for fiscal 2013:
• Annual net revenue growth: Low double digits;
• Marketing expenses: Under $1 billion;
• Annual operating margin: About 60%;
• Tax rate: 30% to 32% range;
• Capital expenditures: $425 million to $475 million range; and
• Annual free cash flow: About $6 billion.
Fiscal Second Quarter 2013 Earnings Results Conference Call Details:
Visa’s executive management team will host a live audio webcast beginning at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) today to discuss the financial results and business highlights. All interested parties are invited to listen to the live webcast at http://investor.visa.com. A replay of the webcast will be available on the Visa Investor Relations website for 30 days. Investor information, including supplemental financial information, is available on Visa Inc.’s Investor Relations website at http://investor.visa.com.
