Visa Inc. (NYSE:V) today announced financial results for the Company's fiscal first quarter 2013 ended December 31, 2012. Net income for the quarter was $1.3 billion, an increase of 26% over the prior year, or $1.93 per share, an increase of 30% over the prior year.
These results included a catch-up tax benefit effect resulting from new guidance on apportionment rules from the State of California, are consistent with our full-year tax and earnings per share guidance, and represent about 11 cents of earnings per share for the quarter. All references to earnings per share assume fully diluted class A share count unless otherwise noted.
Net operating revenue in the first quarter of fiscal 2013 was $2.8 billion, an increase of 12% 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 again delivered a strong quarter of revenue and earnings driven by success across our global franchise," said Charlie Scharf, Chief Executive Officer. "Our results include significant continued investments in our core business, accelerating international expansion and the deployment of next-generation payment solutions for the benefit of our financial institution and merchant partners." Added Scharf, "We have been committed to using our capital wisely and that includes returning capital to stockholders through dividends and share repurchases. The board's decision to increase Visa's repurchase authorization continues that commitment, supported by confidence we have in our future."
Fiscal First Quarter 2013 Financial Highlights:
Payments volume growth, on a constant dollar basis, for the three months ended September 30, 2012, on which fiscal first quarter service revenue is recognized, was 6% over the prior year at $1.0 trillion.
Payments volume growth, on a constant dollar basis, for the three months ended December 31, 2012, was 9% over the prior year at $1.1 trillion.
Cross-border volume growth, on a constant dollar basis, was 11% for the three months ended December 311, 2012.
Total processed transactions, which represent transactions processed by VisaNet, for the three months ended December 31, 2012, were 14.2 billion, a 4% increase over the prior year.
Fiscal first quarter 2013 service revenues were $1.3 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 17% over the prior year to $1.1 billion. International transaction revenues, which are driven by cross-border activity, grew 8% over the prior year to $805 million. Other revenues, which include the Visa Europe licensing fee, were $179 million, a 1% increase over the prior year. Client incentives, which are a contra revenue item, were $553 million and represent 16% of gross revenues.
Total operating expenses were $1.0 billion for the quarter, a 13% increase over the prior year, primarily due to higher personnel and professional fees associated with investments in technology projects to support our growth initiatives.
The effective tax rate was 28.2% for the quarter ended December 31, 2012. This rate was positively impacted by a tax benefit recognized during the quarter as a result of new guidance issued by the State of California regarding apportionment rules for years prior to fiscal 2012.
Cash, cash equivalents, and available-for-sale investment securities were $6.1 billion at December 31, 2012.
The weighted-average number of diluted class A common stock outstanding was 669 million.
Under the terms of the class settlement agreement in the Multidistrict Litigation Proceedings (MDL) 1720, in December 2012, the Company paid approximately $4.0 billion from the litigation escrow account into a settlement fund established pursuant to the definitive class settlement agreement. Additionally, in October 2012, the Company made a payment of $350 million to the individual plaintiffs' settlement fund.
During the three months ended December 31, 2012, the Company repurchased approximately 9 million shares of class A common stock, at an average price of $145.40 per share, using $1.3 billion of cash on hand.
The Company's Board of Directors has authorized a new $1.75 billion class A share repurchase program. The authorization will be in place through January 2014, and is subject to further change at the discretion of the Board.
As announced on January 30, 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 March 5, 2013, to all holders of record of the Company's class A, class B and class C common stock as of February 15, 2013.
On January 30, 2013, the Company held its 2013 annual meeting of stockholders during which holders of the Company's class A common stock at the close of business on December 4, 2012 voted on the four proposals enumerated in the Company's proxy statement. All of management's proposals were approved, but the single stockholder proposal failed to pass.
Visa Inc. updates its financial outlook for the following metric for fiscal 2013:
- Annual free cash flow: About $6 billion. This increase is attributable to tax benefits to be realized during fiscal 2013 related to non-recurring litigation escrow payments of approximately $4.4 billion made during the fiscal first quarter.
Visa Inc. affirms its financial outlook for the following metrics for fiscal 2013:
- Annual net revenue growth: Low double digits;
- Client incentives as a percent of gross revenues: 18% to 18.5% range;
- Marketing expenses: Under $1 billion;
- Annual operating margin: About 60%;
- Tax rate: 30% to 32% range;
- Adjusted annual diluted class A common stock earnings per share growth: High teens; and
- Capital expenditures: $425 million to $475 million range.