Visa Inc. (NYSE:V) today announced financial results for the Company's fiscal third quarter 2014. Net income for the quarter was $1.4 billion, an increase of 11% over the prior year, or $2.17 per share, an increase of 15% over the prior year. All references to earnings per share assume fully-diluted class A share count unless otherwise noted.
Net operating revenue in the fiscal third quarter of 2014 was $3.2 billion, an increase of 5% nominally or 7% on a constant dollar basis over the prior year, driven by solid growth in service revenue and data processing revenues. The strengthening of the U.S. dollar versus the prior year quarter negatively impacted net operating revenue growth by 2 percentage points.
"We are pleased to report 15% earnings per share growth in the face of a continued, subdued global economy," said Charlie Scharf, Chief Executive Officer of Visa Inc. "As expected, revenue growth was affected by a strong U.S. dollar and tepid growth from cross-border transactions. More importantly, global payments volume and processed transactions remained healthy and strong. While some of the headwinds will likely continue in the short-term, we are confident our investments in products such as Visa Checkout, new technologies like tokenization, and new relationships with financial institutions and merchants will continue to drive double-digit revenue growth over the long-term."
Fiscal Third Quarter 2014 Financial Highlights:
Payments volume growth, on a constant dollar basis, for the three months ended March 31, 2014, on which fiscal third quarter service revenue is recognized, was 12% over the prior year at $1.1 trillion.
Payments volume growth, on a constant dollar basis, for the three months ended June 30, 2014, was 11% over the prior year at $1.2 trillion.
Cross-border volume growth, on a constant dollar basis, was 7% for the three months ended June 30, 2014.
Total processed transactions, which represent transactions processed by VisaNet, for the three months ended June 30, 2014, were 16.7 billion, an 11% increase over the prior year.
Fiscal third quarter 2014 service revenues were $1.4 billion, an increase of 9% over 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 11% over the prior year to $1.3 billion. International transaction revenues grew 1% over the prior year to $860 million. Other revenues, which include the Visa Europe licensing fee, were $195 million, an increase of 9% over the prior year. Client incentives, which are a contra revenue item, were $638 million and represent 16.8% of gross revenues.
Total operating expenses were $1.1 billion for the quarter, a 3% decrease over the prior year, primarily related to a reduction in personnel, marketing expense and professional fees.
The effective tax rate was 33.0% for the quarter ended June 30, 2014.
Cash, cash equivalents, and available-for-sale investment securities were $6.8 billion at June 30, 2014.
The weighted-average number of diluted shares of class A common stock outstanding was 628 million for the quarter ended June 30, 2014.
During the three months ended June 30, 2014, the Company repurchased 5.6 million shares of class A common stock, at an average price of $207.13 per share, using $1.2 billion of cash on hand. At June 30, 2014, the Company had $1.9 billion of remaining funds, authorized by the board of directors, available for share repurchase under the current program.
On July 23, 2014, the board of directors declared a quarterly cash dividend of $0.40 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 September 3, 2014, to all holders of record of the Company's class A, class B and class C common stock as of August 15, 2014.
Visa Inc. affirms its financial outlook for the following metrics for fiscal full-year 2014:
- Annual operating margin: Low to mid 60s; and
- Annual free cash flow: About $5 billion.
Visa Inc. updates its financial outlook for the following metrics for fiscal full-year 2014:
- Annual net revenue growth: Constant revenue growth in the 9-10% range, with an expectation of two percentage points of negative foreign currency impact;
- Client incentives as a percent of gross revenues: Around 17%;
- Tax rate: 30-31% range; and
- Annual diluted class A common stock earnings per share growth: 17.5-18.5% range.
Full figures available here.