Visa (NYSE: V) today announced financial results for the company's fiscal second quarter 2009 ended March 31, 2009.
On an adjusted basis (reflective of a normalized tax rate, restructuring and purchase amortization), net income for the quarter was $553 million, or $0.73 per diluted class A common share. GAAP net income for the quarter was $536 million, or $0.71 per diluted class A common share. The weighted average number of diluted class A common shares outstanding was 753 million. The company's adjusted net income and adjusted diluted net income per class A common share are non-GAAP financial measures that are reconciled to their most directly comparable GAAP measures in the accompanying financial tables.
Net operating revenue in the fiscal second quarter of 2009 was $1.6 billion, an increase of 13% over the prior year, driven by contributions across all revenue categories. Though slightly negative in the U.S., payments volume continued to grow on a constant dollar basis in all other regions globally. Processed transactions continued to post solid growth globally.
"Despite the challenging economy, Visa continued to post strong operational and financial performance during our fiscal second quarter, and we remain confident in delivering our EPS guidance for FY 2009," said Joseph Saunders, Chairman and Chief Executive Officer of Visa Inc. "While expense management and efficiency remain key priorities, we will continue to carefully right-size our pricing structure and further invest in our business with the intent of driving incremental growth and realizing operating advantages."
"The resiliency in our business reflects the strength of Visa's credit, debit, and prepaid products worldwide, which continue to benefit from the ongoing secular shift from cash and check to electronic forms of payments," added Saunders. "These diverse products, combined with further expansion of our processing capabilities worldwide, should continue to benefit our shareholders, clients, and cardholders in the future."
Fiscal Second Quarter 2009 Financial Highlights:
Visa Inc.'s operational performance highlights for the fiscal second quarter, as measured by business activity through December 31, 2008, include:
- Payments volume growth, on a nominal basis, was a negative 1% over the prior year at $675 billion;
- Total volume, on a nominal basis and inclusive of cash volume, was $1.1 trillion, flat over the prior year;
- Total cards carrying the Visa brands rose 8% worldwide over the prior year to over 1.7 billion; and
- Total transactions increased by 9% over the prior year to 14.9 billion.
Total processed transactions, which represent transactions processed by VisaNet through March 31, 2009, totaled 9.4 billion, a 6% increase over the prior year.
For the fiscal second quarter 2009, service revenues were $804 million, an increase of over 2% versus the prior year, and are recognized based on payment volume in the prior quarter. All other revenue categories are recognized based on current quarter activity. Data processing revenues rose 10% over the prior year to $544 million. International transaction revenues, which are driven by cross-border payments volume, grew 18% over the prior year to $446 million, as the company benefited from previously enacted pricing initiatives. Other revenues, which include the Visa Europe licensing fee, were $148 million, up 17% over the prior year. Volume and support incentives, which are a contra revenue item, were $295 million, a decline of 13% over the prior year.
Adjusted total operating expenses were $745 million for the fiscal second quarter, a 5% decrease from the prior year's adjusted total operating expenses of $783 million. Total operating expenses on a GAAP basis were $766 million for the quarter, a 31% decrease from the prior year's total operating expenses of $1.1 billion.
Cash, cash equivalents, restricted cash, and investment securities were $5.8 billion at March 31, 2009.
On March 2, 2009, the company unveiled its first global advertising campaign, entitled "More people go with Visa," reflecting the company's evolution to a single, global company. The new campaign enables Visa to align its worldwide marketing under a single theme that highlights the superior value Visa delivers versus cash and checks - including more security, more control and more convenience.
Also in March, MoneyGram International, a leading provider of global payment services, and Visa announced plans to introduce Visa ReadyLink - Visa's prepaid load network - in MoneyGram's 40,000 agent locations across the United States, providing financially underserved consumers with more convenient options to add funds to their Visa reloadable prepaid cards. MoneyGram joins more than 8,000 participating Visa ReadyLink locations, further extending the convenience and security of reload services to Visa prepaid cardholders in more convenient, everyday shopping locations.
On April 23, 2009, the Board of Directors declared a quarterly divided in the aggregate amount of $0.105 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 2, 2009 to all holders of record of Visa's class A, class B and class C common stock as of May 15, 2009.
Also in April, the Board of Directors approved a program in which class C stockholders may liquidate up to 30% of their class C shares between July 1 and September 30, 2009, subject to certain terms and conditions. The remaining class C shares will continue to be subject to the general transfer restrictions that expire on March 25, 2011 under Visa's certificate of incorporation. Class C shares sold under this program will automatically convert to class A shares, tradable in the public market. The release of the class C shares does not increase the number of outstanding shares of the company and there is no dilutive effect to the outstanding share count from these transactions.
Visa Inc. updates its financial outlook for the following metric for full-year 2009:
- Annual adjusted operating margin in the low 50% range.
Visa Inc. updates its financial outlook for the following metric for full-year 2010:
- Annual adjusted operating margin in the high 40% to low 50% range.
Visa Inc. affirms its financial outlook for the following metrics through 2010:
- Annual net revenue growth of high single digits in 2009 and at the lower end of the 11% to 15% range in 2010, given certain economic recovery assumptions;
- Annual adjusted diluted class A common stock earnings per share growth of greater than 20%;
- Annual free cash flow in excess of $1 billion; and
- Capital expenditures in the range of $300 to $350 million in 2009 and representing 3 to 4% of gross revenues in 2010.
This outlook reflects an assumed 40% GAAP tax rate for fiscal year 2009. The company's intent is to reduce this rate to a level around 35-36% over the next four years.
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