Visa Inc. (NYSE:V) today announced financial results for the Company's fiscal first quarter 2015. Net income for the quarter was $1.6 billion, an increase of 11% over the prior year, or $2.53 per share, an increase of 15% over the prior year.
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 2015 was $3.4 billion, an increase of 7% nominally or 9% on a constant dollar basis over the prior year, driven by solid growth in service revenues, data processing revenues and international transaction revenues. The strengthening of the U.S. dollar impacted net operating revenues by approximately 2 percentage points of negative growth during the quarter.
"Visa kicked-off fiscal 2015 delivering another solid quarter of revenue and earnings growth. While the challenges of the macro global environment don't seem to abate, our results have remained consistent and reflect the strength and underlying resilience of our business model," said Charlie Scharf, Chief Executive Officer of Visa Inc. "Our focus remains squarely on investing in our long-term strategic initiatives, driving new technologies and ways to pay as we continue to work collaboratively with governments, issuers, acquirers, and merchant partners."
The Company also announces its board of directors has authorized a four-for-one stock split. Trading will begin on a split-adjusted basis on March 19, 2015.
Fiscal First Quarter 2015 Financial Highlights:
Payments volume growth, on a constant dollar basis, for the three months ended September 30, 2014, on which fiscal first quarter service revenue is recognized, was 11% over the prior year at $1.2 trillion.
Payments volume growth, on a constant dollar basis, for the three months ended December 31, 2014, was 11% over the prior year at $1.2 trillion.
Cross-border volume growth, on a constant dollar basis, was 8% for the three months ended December 31, 2014.
Total processed transactions, which represent transactions processed by VisaNet, for the three months ended December 31, 2014, were 17.6 billion, a 10% increase over the prior year.
Fiscal first quarter 2015 service revenues were $1.5 billion, an increase of 8% 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 9% over the prior year to $1.4 billion. International transaction revenues grew 9% over the prior year to $970 million. Other revenues, which include the Visa Europe licensing fee, were $204 million, an increase of 14% over the prior year. Client incentives, which are a contra revenue item, were $713 million and represent 17.4% of gross revenues.
Total operating expenses were $1.1 billion for the quarter, a 6% increase over the prior year.
The effective tax rate was 30.6% for the quarter ended December 31, 2014.
Cash, cash equivalents, and available-for-sale investment securities were $7.5 billion at December 31, 2014.
The weighted-average number of diluted shares of class A common stock outstanding was 619 million for the quarter ended December 31, 2014.
During the three months ended December 31, 2014, the Company repurchased 3.1 million shares of class A common stock, at an average price of $259.52 per share, using $803 million of cash on hand. From January 1, 2015, through January 27, 2015, the Company repurchased 2.5 million shares of class A common stock, at an average price of $256.31 per share, using $650 million of cash on hand. Fiscal year to date through January 27, 2015, the Company repurchased a total of 5.6 million shares of class A common stock, at an average price of $258.08 per share, using $1.5 billion of cash on hand. The Company has $4.2 billion of remaining funds, authorized by the board of directors, available for share repurchase under the current program.
On January 28, 2015, the board of directors declared a quarterly cash dividend of $0.48 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 3, 2015, to all holders of record of the Company's class A, class B and class C common stock as of February 13, 2015.
In addition, on January 28, 2015, the Company held its 2015 Annual Meeting of Stockholders during which holders of the Company's class A, B and C common stock at the close of business on December 1, 2014, voted on proposals enumerated in the Company's proxy statement. All Proposals other than Proposal 5(a) and 5(d) passed.
Also, on January 28, 2015, Visa's board of directors declared a four-for-one split of its class A common stock. On March 18, 2015, each class A common stockholder of record at the close of business on February 13, 2015 (the "Record Date"), will receive a dividend of three additional shares for every share held on the Record Date. Trading will begin on a split-adjusted basis on March 19, 2015. Holders of class B and C common stock will not receive a stock dividend. Instead, the conversion rate for class B common stock will increase to 1.6483 shares of class A common stock per share of class B common stock, and the conversion rate for class C common stock will increase to 4.0 shares of class A common stock per share of class C common stock. Immediately following the split, the class A, B and C stockholders will retain the same relative ownership percentages that they had prior to the stock split. The stock split will increase the Company's total as-converted shares of class A common stock outstanding as of March 19, 2015, from approximately 614 million shares to approximately 2.5 billion shares based on the share count as of January 27, 2015.
Visa Inc. reaffirms its financial outlook for the following metrics for fiscal full-year 2015:
- Annual net revenue growth: Constant dollar revenue growth of low double digits, with an expectation of two percentage points of negative foreign currency impact;
- Client incentives as a percent of gross revenues: 17.5% to 18.5% range;
- Annual operating margin: Mid 60s;
- Tax rate: Low 30s;
- Annual diluted class A common stock earnings per share growth: Mid teens; and
- Annual free cash flow greater than $6 billion.
Fiscal full-year 2015 annual diluted earnings per share growth assumes an adjusted basis for fiscal full-year 2014.