10-QPeriod: Q2 FY2013

VISA INC. Quarterly Report for Q2 Ended Mar 31, 2013

Filed May 1, 2013For Securities:V

Summary

Visa Inc. reported solid financial results for the quarter ending March 31, 2013, demonstrating continued revenue growth driven by increases in payment volume and processed transactions. Total operating revenues rose by 15% year-over-year, reaching $2.96 billion. This growth was propelled by strong performance in data processing revenues, which saw a 25% increase, and international transaction revenues, up 13%. Despite a decrease in U.S. consumer debit volume due to regulatory impacts, overall payment volumes and transaction counts showed healthy growth, underscoring the ongoing global shift towards electronic payments. The company also managed its expenses effectively, with operating expenses increasing by 13% to $1.1 billion, largely due to investments in personnel and technology to support future growth. Net income attributable to Visa Inc. for the quarter was $1.27 billion, a slight decrease from the prior year, partly influenced by significant litigation payments and a prior-year tax benefit. However, excluding these items, adjusted net income shows continued operational strength. Visa continued its commitment to returning capital to shareholders through share repurchases and dividend payments, highlighting a robust approach to capital allocation.

Financial Highlights

38 data points
Beta

Revenue

$2.96B

Net Income

$1.27B

42.9% Net Margin

Total Assets

$35.06B

Cash & Equivalents

$1.38B

Free Cash Flow

$1.64B

Financial Statements
Beta
Revenue$2.96B
Operating Expenses$1.10B
Operating Income$1.86B
Net Income$1.27B

Key Highlights

  • 1Total operating revenues increased by 15% to $2.96 billion for the three months ended March 31, 2013, compared to the prior year.
  • 2Data processing revenues saw a significant 25% increase, driven by pricing strategies and increased transaction volumes.
  • 3International transaction revenues grew by 13%, reflecting strong cross-border payment volume growth.
  • 4Operating expenses rose 13% to $1.1 billion, reflecting investments in personnel and technology for future growth.
  • 5Net income attributable to Visa Inc. was $1.27 billion for the quarter.
  • 6The company repurchased $1.8 billion of Class A common stock during the quarter and declared a dividend of $0.33 per share.
  • 7Significant litigation payments impacted operating cash flow, but financing activities were bolstered by the release of funds from the litigation escrow account.

Frequently Asked Questions

Visa's revenue growth was primarily driven by an increase in payment volume and the number of processed transactions. Specifically, data processing revenues saw a significant 25% increase, and international transaction revenues grew by 13%, indicating strong global demand for electronic payments.

Visa made significant payments totaling $4.0 billion from its litigation escrow account towards the interchange MDL settlement during the period. This impacted cash flow from operations, but also provided a corresponding inflow in financing activities. The company also saw a large reduction in its 'Accrued litigation' liability from $4.386 billion to $6 million.

Visa Inc. has granted Visa Europe a perpetual put option that could obligate Visa Inc. to purchase all outstanding shares of Visa Europe. While the fair value of this option liability was $145 million at March 31, 2013, the actual purchase price if exercised could be several billion dollars, potentially requiring external financing. Visa Europe has indicated it may not be obligated to indemnify Visa Inc. for claims related to the European Commission's Statement of Objections.

Visa is implementing strategies to mitigate the negative impacts of the Dodd-Frank Act, particularly concerning U.S. debit interchange fees. These strategies include pricing modifications and working with clients to secure routing preference. This has influenced revenue mix and client incentives, with the company noting an anticipated decrease in U.S. consumer debit volume due to the act.