Visa Inc. (NYSE:V) today announced financial results for the Company's fiscal first quarter 2014. Net income for the fiscal first quarter was $1.4 billion or $2.20 per share, an increase of 9% and 14%, respectively, over the prior year results.
All references to earnings per share assume fully-diluted class A share count unless otherwise noted.
Net operating revenue in the fiscal first quarter of 2014 was $3.2 billion, an increase of 11% over the prior year, driven by strong growth in service revenues, data processing revenues and international transaction revenues. The strengthening of the U.S. dollar impacted net operating revenues by 2 percentage points of negative growth during the quarter.
"Visa delivered a strong fiscal first quarter, posting solid revenue, net income and earnings growth. We continue to focus on embracing new partners and new technology which will make our network the one of choice. We also continue to build services for issuers, acquirers and merchants to make our network a valuable asset for our clients," said Charlie Scharf, Chief Executive Officer of Visa Inc.
"The recent series of data compromises are terribly unfortunate for everyone involved. However, the established and well understood rules that govern traditional networks coupled with the cooperation between merchants, financial institutions, and the networks have minimized the level of the monetary losses. But these incidents remind us of the need for all of us to continue to work together to secure payments from criminals. Visa is committed to ensuring our network operates at the highest level of security available and will continue to move the industry towards the adoption of new safeguards including EMV chip and tokenization. We also will work with all participants to look beyond these technologies," added Scharf.
Fiscal First Quarter 2014 Financial Highlights:
Payments volume growth, on a constant dollar basis, for the three months ended September 30, 2013, on which fiscal first quarter service revenue is recognized, was 13% over the prior year at $1.1 trillion.
Payments volume growth, on a constant dollar basis, for the three months ended December 31, 2013, was 11% over the prior year at $1.2 trilliat $1.2 trillion.
Cross-border volume growth, on a constant dollar basis, was 12% for the three months ended December 31, 2013.
Total processed transactions, which represent transactions processed by VisaNet, for the three months ended December 31, 2013, were 16.0 billion, a 13% increase over the prior year.
Fiscal first quarter 2014 service revenues were $1.4 billion, an increase of 9% 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 13% over the prior year to $1.3 billion. International transaction revenues, which are driven by cross-border volume, grew 11% over the prior year to $891 million. Other revenues, which include the Visa Europe licensing fee, were $180 million, flat over the prior year. Client incentives, which are a contra revenue item, were $599 million and represent 16.0% of gross revenues.
Total operating expenses were $1.1 billion for the quarter, a 3% increase over the prior year, primarily due to network and processing fees, personnel, and depreciation and amortization associated with investments in technology projects to support our global growth initiatives.
The effective tax rate was 32.4% for the quarter ended December 31, 2013.
Cash, cash equivalents, and available-for-sale investment securities were $7.0 billion at December 31, 2013.
The weighted-average number of diluted shares of class A common stock outstanding was 639 million for the quarter ended December 31, 2013.
During the three months ended December 31, 2013, the Company repurchased 5.5 million shares of class A common stock, at an average price of $199.56 per share, using $1.1 billion of cash on hand. At December 31, 2013, the Company had $4.2 billion of remaining funds, authorized by the board of directors, available for share repurchase under the current program.
On January 29, 2014, the board of directors declared a quarterly cash dividend of $0.40 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 4, 2014, to all holders of record of the Company's class A, class B and class C common stock as of February 14, 2014.
In addition, on January 29, 2014, the Company held its 2014 annual meeting of stockholders during which holders of the Company's class A common stock at the close of business on December 3, 2013, voted on the three proposals enumerated in the Company's proxy statement. All of management's proposals were approved.
Visa Inc. affirms its financial outlook for the following metrics for fiscal full-year 2014:
Annual net revenue growth: Low double-digits on a constant dollar basis, with an expectation of two percentage points of negative foreign currency impact;
Client incentives as a percent of gross revenues: 16.5% to 17.5% range;
Annual operating margin: Low 60s;
Annual diluted class A common stock earnings per share growth: Mid to high teens; and
Annual free cash flow: About $5 billion.