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Visa Q4 net soars 51%

28 October 2010  |  1560 views  |  0 Source: Visa

Visa (NYSE:V) today announced financial results for the Company's fiscal fourth quarter and full-year 2010. For the fourth quarter ending September 30, 2010, GAAP net income was $774 million, an increase of 51% over the prior year.

Diluted class A common stock earnings per share were $1.06, an increase of 54% over the prior year. On an adjusted basis (excluding the revaluation of the Company's Visa Europe put option), net income for the quarter was $695 million, an increase of 35% over the prior year. Diluted class A common stock earnings per share were $0.95, an increase of 38% over the prior year.

GAAP net operating revenue in the fiscal fourth quarter of 2010 was $2.1 billion, an increase of 13% over the prior year and driven by strong contributions across all revenue categories, in particular data processing and international transaction revenues. Currency fluctuations contributed a positive 1% towards quarterly net operating revenues.

GAAP net income for the full-year was $3.0 billion, an increase of 26% over the prior year. Diluted class A common stock earnings per share were $4.01, an increase of 29% over the prior year. GAAP net operating revenue in the full-year was $8.1 billion, an increase of 17% over the prior year and was driven by strong contributions across all revenue categories. Currency fluctuations contributed a positive 1% towards full-year net operating revenues.

On an adjusted basis (excluding the revaluation of the Company's Visa Europe put option), net income for the full-year was $2.9 billion, an increase of 23% over the prior year. Diluted class A common stock earnings per share were $3.91, an increase of 26% over the prior year. The Company's adjusted quarterly and full-year net income per class A common shares outstanding are non-GAAP financial measures that are reconciled to their most directly comparable GAAP measures in the accompanying financial tables.

Visa's results for both the fourth fiscal quarter and the full-year reflect the inclusion of CyberSource for the two months after its acquisition.

"We are very pleased with our fourth fiscal quarter and full-year earnings results as we continue to successfully execute on on our strategic initiatives while in the midst of a very challenging business environment," said Joseph Saunders, Chairman and Chief Executive Officer. "Our continued focus, execution and resilience have enabled us to continue to generate solid returns and meaningful growth across our business, products and geographies."

"Looking ahead to our fiscal 2011, Visa will continue to invest in initiatives and investments to grow our core and emerging product portfolios globally, innovate into new payments channels and integrate our recent acquisition of CyberSource. We are committed to delivering solid business performance, supporting our financial clients and partners, and delivering above average shareholder returns."

Fiscal Fourth Quarter 2010 Financial Highlights:

Payments volume growth, on a constant dollar basis for the three months ended June 30, 2010 on which fiscal fourth quarter service revenue is recognized, was a positive 14% over the prior year at $802 billion.

Payments volume growth, on a constant dollar basis, for the three months ended September 30, 2010, was a positive 14% over the prior year at $828 billion.

Cross border volume growth, on a constant dollar basis, was a positive 16% for the three months ended September 30, 2010.

Total processed transactions, which represent transactions processed by VisaNet, for the three months ended September 30, 2010, totaled 12.1 billion and were a positive 16% increase over the prior year.

For the fiscal fourth quarter 2010, service revenues were $912 million, an increase of 13% 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 15% over the prior year to $840 million. International transaction revenues, which are driven by cross border payments volume, grew 22% over the prior year to $619 million. Other revenues, which include the Visa Europe licensing fee, were $167 million, up 3% over the prior year. Volume and support incentives, which are a contra revenue item, were $421 million and represent 17% of gross revenues.

Total operating expenses on a GAAP basis were $1 billion for the quarter, a less than 1% decline over the prior year.

Cash, cash equivalents, restricted cash, and available-for-sale investment securities were $6.0 billion at September 30, 2010.

Visa's GAAP effective tax rate was 38% for quarter ended September 30, 2010, excluding the revaluation of the Visa Europe put option.

Fiscal Full-Year 2010 Financial Highlights:

For the fiscal full-year, service revenues were $3.5 billion, an increase of 10% over the prior year. Data processing revenues rose 29% over the prior year to $3.1 billion. International transaction revenues, which are driven by cross-border payments volume, grew 20% over the prior year to $2.3 billion. Other revenues, which include the Visa Europe licensing fee, were $713 million, up 14% over the prior year.

Volume and support incentives, which are a contra revenue item, were $1.6 billion and represent 16% of gross revenues.

Total processed transactions, which represent transactions processed by VisaNet for the 12 months ended September 30, 2010, totaled 45.4 billion, a 14% increase over the prior year.

Total operating expenses on a GAAP basis were $3.5 billion for the full-year, a 3% increase over the prior year.

Visa's GAAP effective tax rate was 37% for the twelve months ended September 30, 2010, excluding the revaluation of the Visa Europe put option.

Notable Events:

As previously disclosed, on October 4, 2010, Visa entered into a settlement agreement with the U.S. Department of Justice (DOJ) and the attorneys general of seven states to resolve antitrust investigations into the Company's merchant acceptance rules in the U.S. The DOJ issued a civil investigative demand to Visa in 2008, seeking information about certain Visa acceptance rules, including those related to surcharging and discounting. Both investigations ended with a consent decree that sets forth the terms of the settlement, subject to court approval. There is no monetary obligation associated with the DOJ settlement.

On October 8, 2010, the Company deposited $800 million into the litigation escrow account previously established under the Company's retrospective responsibility plan. The deposit into the escrow account reduced the conversion rate applicable to the Company's class B common stock from 0.5550 to 0.5102. On an as-converted basis, the deposit had the effect of a repurchase of approximately 11.0 million shares of class A common stock from the Company's class B shareholders.

On October 20, 2010, the Board of Directors declared a quarterly dividend in the aggregate amount of $0.15 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 December 7, 2010, to all holders of record of the Company's class A, class B and class C common stock as of November 19, 2010. In addition, the Company announced it has successfully completed its $1 billion share repurchase plan authorized in October 2009. In the fourth fiscal quarter of 2010, the Company repurchased a total of 4.6 million shares of class A common stock at an average price of $72.29 per share. Under the full plan, a total of 12.9 million shares of class A common stock was repurchased at an average price of $77.48 per share.

Today, the Company announces that its Board of Directors has authorized a new $1 billion class A common stock repurchase plan. The authorization will be in place through September 30, 2011, and is subject to extension or expansion at the determination of Visa's Board of Directors.

Financial Outlook:

Visa Inc. affirms its financial outlook for the following metric for 2011:

* Annual diluted class A common stock earnings per share growth of greater than 20%.


Visa Inc. updates its financial outlook for the following metric for 2011:

* Annual free cash flow in excess of $3 billion.


Visa Inc. provides its financial outlook for the following metrics for 2011:

* Annual net revenue growth: 11% to 15% range;
* Volume and support incentives as a percent of gross revenues: 16% to 16.5% range;
* Advertising, marketing and promotion expenses: Less than $900 million;
* Annual operating margin: About 60%;
* GAAP tax rate: 36.5% to 37% range; and
* Capital expenditures: Between $250-$275 million.

Read the full statement here.

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