Visa (NYSE:V) today announced financial results for the Company's fiscal second quarter 2011 ended March 31, 2011. GAAP net income for the quarter was $881 million, or $1.23 per diluted class A common share.
The weighted-average number of diluted class A common shares outstanding was approximately 714 million.
GAAP net operating revenue in the fiscal second quarter of 2011 was $2.2 billion, an increase of 15% 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 2% towards quarterly net operating revenues.
"Visa delivered a solid financial performance in our fiscal second quarter with double-digit growth in payments volume, cross border volume and Visa-processed transactions from across the globe," said Joseph Saunders, Chairman and Chief Executive Officer of Visa Inc. "With a strong first half of our fiscal 2011 year behind us, we remain focused on driving continued transaction growth, maintaining strong financial performance and expense control discipline, and delivering value to our shareholders through share repurchase programs and dividend payments."
"In addition to working with our financial institutions and merchant clients to expand card issuance and acceptance for our core products, we are investing in new platforms, channels and technologies that will deliver value to our clients and consumers for years to come," continued Saunders. "The global adoption of mobile and internet technology presents an enormous opportunity for Visa to leverage our network and proven track record of delivering electronic payments worldwide."
Fiscal Second Quarter 2011 Financial Highlights:
Payments volume growth, on a constant dollar basis, for the three months ended December 31, 2010, on which fiscal second quarter service revenue is recognized, was a positive 15% over the prior year at $897 billion.
Payments volume growth, on a constant dollar basis, for the three months ended March 31, 2011, was a positive 13% over the prior year at $861 billion.
Cross border volume growth, on aa constant dollar basis, was a positive 13% for the three months ended March 31, 2011.
Total processed transactions, which represent transactions processed by VisaNet, for the three months ended March 31, 2011, were 12 billion, a positive 13% increase over the prior year.
For the fiscal second quarter 2011, service revenues were $1.1 billion, an increase of 24% 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 13% over the prior year to $823 million. International transaction revenues, which are driven by cross border payments volume, grew 14% over the prior year to $624 million. Other revenues, which include the Visa Europe licensing fee, were $156 million, a 10% decrease over the prior year. Client incentives, which are a contra revenue item, were $451 million and represents 17% of gross revenues.
Total operating expenses on a GAAP basis were $862 million for the quarter, a 3% increase over the prior year.
Cash, cash equivalents, restricted cash, and available-for-sale investment securities were $6.6 billion at March 31, 2011.
Visa's GAAP effective tax rate was 36% for quarter ended March 31, 2011.
During the three months ended March 31, 2011, the Company effectively repurchased approximately 8.7 million class A shares on an as-converted basis, at an average price of $72.58 per share, for a total cost of $630 million. Of the $630 million, $400 million of class B shares were effectively repurchased through the March funding of the litigation escrow account previously established under the Company's retrospective responsibility plan, representing 5.4 million class A shares on an as-converted basis at an average price of $73.81 per share. The remaining $230 million in repurchases of class A common stock were executed in the open market, representing 3.3 million shares at an average price of $70.53 per share. At March 31, 2011, the October 27, 2010 share repurchase program had remaining authorized funds of $64 million.
As announced on April 25, 2011, 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 June 7, 2011, to all holders of record of the Company's class A, class B and class C common stock as of May 20, 2011.
Today, the Company announces that its Board of Directors has authorized a new $1 billion class A share repurchase program. The authorization will be in place through April 20, 2012, and is subject to further change at the discretion of the Board.
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.
*This range may change based on future developments regarding pending federal debit regulations.