10-QPeriod: Q1 FY2012

VISA INC. Quarterly Report for Q1 Ended Dec 31, 2011

Filed February 8, 2012For Securities:V

Summary

Visa Inc.'s Q1 FY12 report (ending December 31, 2011) shows robust top-line growth with total operating revenues reaching $2.55 billion, a 14% increase year-over-year. This growth was driven by strong performance in service, data processing, and international transaction revenues, reflecting continued global migration to digital payments and successful integration of recent acquisitions. Net income attributable to Visa Inc. rose to $1.03 billion, a significant jump from $884 million in the prior year's comparable quarter, leading to a substantial increase in basic and diluted earnings per share across all common stock classes. The company also strengthened its balance sheet by strategically managing its cash flows and equity, including a substantial deposit into its litigation escrow account, which impacted share count for EPS calculations. Despite the positive financial performance, investors should be aware of the ongoing impact of the U.S. Dodd-Frank Act's debit interchange fee regulations, which the company anticipates will moderate U.S. revenue growth in the short term. Visa is actively renegotiating client contracts and adapting its business models to mitigate these effects. Furthermore, the company continues to monitor significant legal proceedings, particularly the interchange litigation, for which a substantial escrow deposit was made. The Visa Europe put option remains a notable contingent liability, with the fair value disclosed, though the potential purchase price could be significantly higher.

Financial Highlights

40 data points
Beta

Revenue

$2.55B

Net Income

$1.03B

40.4% Net Margin

Total Assets

$35.77B

Cash & Equivalents

$1.94B

Free Cash Flow

$1.29B

Financial Statements
Beta
Revenue$2.55B
Operating Expenses$929.00M
Operating Income$1.62B
Net Income$1.03B

Key Highlights

  • 1Total operating revenues increased by 14% to $2.55 billion for the quarter ended December 31, 2011, compared to the prior year.
  • 2Net income attributable to Visa Inc. grew significantly to $1.03 billion, up from $884 million in the same period last year.
  • 3Earnings per share saw a marked improvement, with Class A basic EPS rising to $1.50 from $1.23.
  • 4The company made a substantial $1.57 billion deposit into its litigation escrow account, impacting cash flows and share count for EPS calculations.
  • 5Visa Inc. continues to see strong growth in international payments volume and processed transactions.
  • 6The company anticipates moderating U.S. revenue growth in fiscal 2012 due to the impact of the Dodd-Frank Act's debit interchange regulations.
  • 7A new $500 million share repurchase program was announced in February 2012.

Frequently Asked Questions

Visa reported a strong 14% increase in total operating revenues, reaching $2.55 billion for the quarter ended December 31, 2011. This growth was driven by increases in service revenues, data processing revenues, and international transaction revenues.

The Dodd-Frank Act, specifically its debit interchange fee regulations, is expected to moderate Visa's U.S. revenue growth in the short term. The company is actively renegotiating contracts and adapting its business models to mitigate these impacts, with expected revenue growth to regain momentum in fiscal 2013.

Visa deposited $1.57 billion into its litigation escrow account during the quarter, related to ongoing interchange litigation. This significant cash outflow reduced the company's cash and cash equivalents and also had the economic effect of reducing the as-converted class B common stock share count, thereby impacting earnings per share calculations.

Visa granted Visa Europe a perpetual put option, which could obligate Visa Inc. to purchase all outstanding shares of Visa Europe. While the fair value of this option was $145 million at December 31, 2011, the actual purchase price if exercised could be substantially higher, potentially requiring the company to seek third-party financing.