Visa (NYSE: V) today announced financial results for the Company's fiscal first quarter 2011 ended December 31, 2010.
GAAP net income for the quarter was $884 million, or $1.23 per diluted class A common share. The weighted average number of diluted class A common shares outstanding was approximately 719 million.
GAAP net operating revenue in the fiscal first quarter of 2011 was $2.2 billion, an increase of 14% over the prior year and driven by strong double-digit growth in service revenues, data processing revenues and international transaction revenues. Currency fluctuations contributed a positive 1% towards quarterly net operating revenues.
"Visa's first quarter was a great start to our fiscal 2011 as evidenced by strong earnings fueled by continued growth in payments volume, cross border volume and processed transactions globally - our core business," said Joseph Saunders, Chairman and Chief Executive Officer of Visa Inc.
"Visa is in a strong position to continue to accelerate the migration to electronic payments, particularly in economies where cash and check remain predominant. We are intensely focused on growing Visa's revenue globally, working alongside our financial institution, merchant, technology and government partners. In parallel, we are aggressively investing to expand Visa payment services through new technology platforms, like mobile, eCommerce and money transfer, to extend the reach and value of our global network."
Fiscal First Quarter 2011 Financial Highlights:
Payments volume growth, on a constant dollar basis, for the three months ended September 30, 2010, on which fiscal first quarter service revenue is recognized, was a positive 14% over the prior year at $829 billion.
Payments volume growth, on a constant dollar basis, for the three months ended December 31, 2010, was a positive 15% over the prior year at $897 billion.
Cross border volume growth, on a constant dollar basis, was a positive 15% for the three months ended December 31, 2010.
Total processed transactions, which represent transactions processed by VisaNet, for the three months ended December 31, 2010, were 13 billion, a positive 15% increase over the prior year.
For the fiscal first quarter 2011, service revenues were $1.0 billion, an increase of 22% 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 10% over the prior year to $844 million. International transaction revenues, which are principally driven by cross border payments volume, grew 14% over the prior year to $630 million. Other revenues, which include the Visa Europe licensing fee, were $161 million, a 15% decrease over the prior year. Client incentives, which are a contra revenue item, were $405 million and represents 15% of gross revenues.
Total operating expenses on a GAAP basis were $872 million for the quarter, a 17% increase over the prior year.
Cash, cash equivalents, restricted cash, and available-for-sale investment securities were $6.5 billion at December 31, 2010.
Visa's GAAP effective tax rate was 36% for quarter ended December 31, 2010.
During the three months ended December31, 2010, the Company effectively repurchased approximately 15.3million shares at an average price of $72.08 per share, for a total cost of $1.1 billion. Of the $1.1 billion, $800 million of shares were effectively repurchased through the October funding of the litigation escrow account previously established under the Company's retrospective responsibility plan. On an as-converted basis, 11million shares of class A common stock were effectively repurchased at $72.74 per share. The balance of the repurchase, $306 million of class A common stock, was executed in the open market and totaled 4.3million shares at an average price of $70.40 per share. These purchases were made under the previously announced $1.0 billion share repurchase plan, as authorized by the Company's board of directors. At December31, 2010, the share repurchase plan had remaining authorized funds of $694 million.
As previously announced, on January 26, 2011, the Company's wholly-owned subsidiary, Visa International, sold its 10 percent stake in Visa Vale issuer CBSS to Banco do Brasil and Bradesco. CBSS will continue to issue Visa Vale prepaid cards in Brazil and Visa expects no disruption to cardholder service as a result of this transaction. Visa's proceeds from the sale were $103 million. The sale is subject to regulatory approval by Brazil's Conselho Administrativo de Defesa Economica.
On January 27, 2011, the Company held its 2011 annual meeting of stockholders. Among other proposals, stockholders approved the immediate declassification of the Board of Directors, approved implementation of a majority vote standard in uncontested elections of directors (effective at the 2012 annual meeting), approved compensation of the Company's named executive officers as described in the Company's proxy statement (on an advisory basis) and selected an annual advisory vote on executive compensation (on an advisory basis).
In addition, the Company announced that its Board of Directors had approved a class C share release program, in which all remaining 55 million class C shares will become eligible for sale on February 7, 2011.Class C shares sold in the public market upon release will automatically convert to class A common stock. The release of the class C shares will not increase the number of outstanding shares on an as-converted basis of the Company's common stock, and there will be no dilutive effect to the outstanding class A common stock share count on an as-converted basis. Also, 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 March 1, 2011, to all holders of record of the Company's class A, class B and class C common stock as of February 11, 2011.
Visa Inc. affirms its financial outlook for the following metrics through 2011:
* Annual net revenue growth: 11% to 15% range;
* Client incentives as a percent of gross revenues: 16% to 16.5% range;
* Marketing expenses: Less than $900 million;
* Annual operating margin: About 60%;
* GAAP tax rate: 36.5% to 37% range;
* Annual diluted class A common stock earnings per share growth of greater than 20%;
* Capital expenditures: Between $250-$275 million; and
* Annual free cash flow in excess of $3 billion.