Summary
Visa Inc. reported strong financial performance for the quarter ended December 31, 2015. The company saw a significant increase in total assets, primarily driven by a substantial rise in cash and cash equivalents and a large debt issuance. Revenue growth was observed across key segments like service, data processing, and international transactions, despite a headwind from the strengthening U.S. dollar. Net income and earnings per share also showed healthy year-over-year increases. The company also made substantial progress on its strategic acquisition of Visa Europe, including significant debt issuance to fund the transaction and the establishment of new credit facilities.
Financial Highlights
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Financial Statements
Beta
| Revenue | $3.56B |
| Operating Expenses | $1.17B |
| Operating Income | $2.40B |
| Interest Expense | $29.00M |
| Net Income | $1.94B |
Key Highlights
- 1Total assets increased significantly to $54.98 billion from $39.37 billion in the prior quarter, largely due to a substantial increase in cash and cash equivalents ($12.84 billion) and the issuance of $16.0 billion in senior notes.
- 2Total operating revenues grew by 5% to $3.57 billion, driven by increases in service revenues (7%), data processing revenues (7%), and international transaction revenues (6%).
- 3Net income rose by 24% to $1.94 billion, and diluted earnings per share for Class A common stock increased by 26% to $0.80 compared to the prior year quarter.
- 4Visa Inc. issued $16.0 billion in fixed-rate senior notes in December 2015, with maturities ranging from 2 to 30 years, to fund a portion of the Visa Europe acquisition and for general corporate purposes.
- 5The company repurchased approximately $2.0 billion of its Class A common stock during the quarter, demonstrating a commitment to returning capital to shareholders.
- 6Visa Europe acquisition progress: Transaction Agreement signed, preferred stock structure outlined, and acquisition expected in fiscal Q3 2016, subject to regulatory approvals.
- 7A new $4.0 billion, 5-year unsecured revolving credit facility was entered into on January 27, 2016, replacing the previous $3.0 billion facility.
Frequently Asked Questions
Visa's revenue growth was primarily driven by a 4% increase in nominal payments volume, leading to a 7% rise in service revenues. Data processing revenues also increased by 7% due to an 8% growth in processed transactions. International transaction revenues saw a 6% increase, supported by pricing modifications, though partially offset by currency headwinds.
Visa signed a Transaction Agreement to acquire 100% of Visa Europe for up to €21.2 billion, with an expected closing in fiscal Q3 2016. The financing includes €11.5 billion in upfront cash and €5.0 billion in preferred stock at closing, plus contingent cash consideration. To fund this, Visa issued $16.0 billion in senior notes in December 2015.
Visa's balance sheet saw a substantial increase in total assets to $54.98 billion, largely due to a near quadrupling of cash and cash equivalents to $12.84 billion and the significant debt issuance. Long-term debt increased from $0 to $15.88 billion following the $16.0 billion senior note issuance.
The strengthening U.S. dollar had a negative impact on Visa's international operations. It resulted in a three-percentage point reduction in total operating revenue growth and a 9% decline in international nominal payments volume growth on a nominal basis. However, on a constant dollar basis, international payments volume grew by 15%.