10-QPeriod: Q2 FY2016

VISA INC. Quarterly Report for Q2 Ended Mar 31, 2016

Filed April 25, 2016For Securities:V

Summary

Visa Inc. reported strong financial results for the quarter and six months ended March 31, 2016. The company demonstrated robust revenue growth driven by increased processed transactions and payments volume. Net income and diluted earnings per share saw a significant increase compared to the prior year, reflecting operational efficiencies and strategic pricing adjustments. A key development during this period was the significant debt issuance of $16 billion to partially fund the anticipated acquisition of Visa Europe, a transaction that, while subject to regulatory approval and ongoing amendments, represents a major strategic move for global expansion. Despite the positive operational performance, investors should note the impact of non-operating items, such as unrealized gains on currency forward contracts and the revaluation of the Visa Europe put option, which influenced reported net income. The company also continued its aggressive share repurchase program and dividend payments, underscoring a commitment to returning value to shareholders. Overall, Visa's financial position remains strong, supported by healthy cash flows and a robust credit facility, positioning it well for continued growth and strategic initiatives.

Financial Highlights

43 data points
Beta

Revenue

$3.63B

Net Income

$1.71B

47.1% Net Margin

Total Assets

$54.33B

Cash & Equivalents

$15.94B

Free Cash Flow

$840.00M

Financial Statements
Beta
Revenue$3.63B
Operating Expenses$1.19B
Operating Income$2.43B
Interest Expense$132.00M
Net Income$1.71B

Key Highlights

  • 1Total operating revenues increased by 6% to $3.6 billion for the three months ended March 31, 2016, compared to the prior year period.
  • 2Net income rose by 10% to $1.7 billion for the three months ended March 31, 2016, resulting in diluted earnings per share of $0.71.
  • 3Visa issued $16.0 billion in fixed-rate senior notes in December 2015, primarily to fund the anticipated acquisition of Visa Europe.
  • 4The company repurchased $1.8 billion of its Class A common stock during the three months ended March 31, 2016, as part of its ongoing share repurchase program.
  • 5Processed transactions increased by 9% for the three months ended March 31, 2016, indicating continued growth in the adoption of electronic payments.
  • 6International payments volume growth, excluding currency impacts, was 14% for the three months ended December 31, 2015, highlighting strong global demand.
  • 7The acquisition of Visa Europe is progressing, with an amendment to eliminate the earn-out consideration and increase cash payments, subject to regulatory approvals.

Frequently Asked Questions

Visa's revenue growth was primarily driven by an increase in processed transactions and nominal payments volume, reflecting the ongoing global shift towards electronic payments and the company's strategic pricing adjustments implemented in the prior fiscal year.

Visa has reached a preliminary agreement to amend the transaction to eliminate the earn-out consideration and increase cash payments, totaling €13.25 billion. This significant acquisition is subject to regulatory approval. The financing for this acquisition included a $16 billion debt issuance, impacting interest expense but strengthening Visa's global market position.

Visa reported non-operating income from net unrealized gains on currency forward contracts ($116 million before tax) and a non-cash decrease in the fair value of the Visa Europe put option ($255 million). While these items increased reported net income, the company provided adjusted non-GAAP figures to offer a clearer view of its operating performance.

Visa continues to return capital to shareholders through a combination of significant share repurchases and consistent dividend payments. During the quarter, the company repurchased approximately $1.8 billion of its Class A common stock and declared a quarterly cash dividend of $0.14 per share.