Visa (NYSE: V) today announced financial results for the Company's fiscal second quarter 2010 ended March 31, 2010. GAAP net income for the quarter was $713 million, or $0.96 per diluted class A common share.
The weighted average number of diluted class A common shares outstanding was 742 million.
GAAP net operating revenue in the fiscal second quarter of 2010 was $2.0 billion, an increase of 19% over the prior year and driven by strong contributions across all revenue categories, in particular data processing and international transaction revenues.
"Visa delivered strong financial performance during our fiscal second quarter and we remain confident in delivering our guidance for fiscal year 2010," said Joseph Saunders, Chairman and Chief Executive Officer of Visa Inc. "Our performance was fueled by higher than expected payments volume growth. As I discussed at our recent Investor Day, we are increasingly optimistic that economic growth will gradually improve. At the same time, we remain diligent about how we manage our business and finances throughout the current economic environment."
"Visa's long term strategic goals and our ability to drive the migration to Visa products and services are based on our history of innovation and market responsiveness," added Saunders. "Our pending acquisition of CyberSource is the most recent example of the Company responding to market opportunities to fuel future growth. We remain focused on enhancing product offerings and providing new technologies to our clients and customers, while we continue to deliver value to our shareholders."
Fiscal Second Quarter 2010 Financial Highlights:
Payments volume growth, on a constant dollar basis for the three months ended December 31, 2009 on which fiscal second quarter service revenue is recognized, was a positive 8% over the prior year at $769 billion.
Payments volume growth, on a constant dollar basis, for the three months ended March 31, 2010, was a positive 13% over the prior year at $745 billion.
Cross border volume growth, on a constant dollar basis, was positive 12% for the three months ended March 31, 2010.
Total processed transactions, which represent transactions processed by VisaNet, for the three months ended March 31, 2010 totaled 10.6 billion, a 14% increase over the prior year.
For the fiscal second quarter 2010, service revenues were $885 million, 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 34% over the prior year to $728 million. International transaction revenues, which are driven by cross border payments volume, grew 22% over the prior year to $545 million. Other revenues, which include the Visa Europe licensing fee, were $173 million, up 17% over the prior year. Volume and support incentives, which are a contra revenue item, were $372 million, which represents 16% of gross revenue.
Total operating expenses on a GAAP basis were $837 million for the quarter, a 9% increase over the prior year.
Cash, cash equivalents, restricted cash, and available-for-sale investment securities were $6.3 billion at March 31, 2010.
In October 2009, the Company announced that its Board of Directors authorized a $1.0 billion share repurchase plan through September 30, 2010, and is subject to change at the determination of Visa's Board of Directors. During the three months ended March 31, 2010, we repurchased 2.8 million shares of our outstanding class A common stock at an average price of $83.61 per share in the open market for a total cost of $231 million. During the six months ended March 31, 2010, we repurchased 8.3 million shares of our outstanding class A common stock at an average price of $80.40 per share in the open market for a total cost of $664 million. At March 31, 2010, the share repurchase plan has remaining authorized funds of $336 million.
As previously announced, the Board of Directors approved the release of additional class C shares. The number of shares released for any class C shareholder was the greater of (a) 50% (fifty percent) of the restricted class C shares held by that shareholder as of March 1, 2010, and (b) 5,000 (five thousand) class C shares. Under this program, 56 million shares of class C common stock were released from transfer restrictions during the second quarter of fiscal 2010. The release of the class C shares did not increase the number of outstanding shares on an as-converted basis, and there are no dilutive effects to the outstanding class A common stock share count on an as-converted basis from these transactions.
As previously announced, the Company has entered into a definitive agreement to acquire CyberSource Corporation ("CyberSource"), a leading provider of electronic payment, risk management and payment security solutions to online merchant, at a price of $26 per share, or total consideration of approximately $2.0 billion to be paid with cash on hand. With the addition of CyberSource, Visa will offer merchants and financial institutions eCommerce solutions that include enhanced online payment processing capabilities, payment routing, fraud protection services and secure data hosting. The transaction is subject to customary closing conditions, including approval by the stockholders of CyberSource and required regulatory approvals. The transaction, which has been approved by the Visa and CyberSource boards of directors, does not require a Visa shareholder vote, and is expected to close in Visa's fourth fiscal quarter of 2010.
Visa Inc. updates its financial outlook for the following metrics for 2010:
* Annual net revenue growth: high end of the 11% to 15% range; and
* Volume and support incentives as a percent of gross revenues: high end of the 16% to 17% range.
Visa Inc. affirms its financial outlook for the following metrics through 2010:
* Advertising, marketing and promotion expenses: less than $1 billion;
* Annual operating margin: mid to high 50% range;
* GAAP tax rate: 36.5% to 38.5% range;
* Annual diluted class A common stock earnings per share: growth greater than 20%;
* Capital expenditures: about $200 million; and
* Annual free cash flow: in excess of $2 billion.
Visa Inc. affirms its financial outlook for the following metrics through 2011:
* Annual diluted class A common stock earnings per share: growth greater than 20%; and
* Annual free cash flow: in excess of $2 billion.