01—Abstract
Summary
Summary of the 10-Q filed July 20, 2017. Cited figures are marked; the original filing is the authoritative source.
Visa Inc. reported strong financial performance for the nine months ended June 30, 2017, with net income increasing by 12% to $4.56 billiona compared to the same period in the prior year.
This growth was driven by a significant 25% increase in net operating revenues, reaching $13.5 billionb. This revenue surge is largely attributable to the full inclusion of Visa Europe's operations following its acquisition in June 2016, coupled with continued growth in payment volumes and processed transactions. Despite robust revenue growth, the company's reported net income was impacted by a substantial $1.5 billion non-recurring, non-cash income tax provision related to a legal entity reorganization in February 2017.
Excluding this and other one-time items, adjusted net income saw a stronger increase of 25% year-over-year. The company also continued its commitment to returning capital to shareholders, repurchasing $5.2 billionc in common stock and paying $1.2 billion in dividends during the first nine months of the fiscal year.
02—Key points
Key Highlights
- Net income grew 12% to $4.56 billion for the nine months ended June 30, 2017.
- Net operating revenues increased 25% to $13.5 billion for the nine months ended June 30, 2017, driven by Visa Europe integration and payment volume growth.
- A $1.5 billion non-recurring, non-cash income tax provision related to a legal entity reorganization impacted net income.
- Adjusted net income (excluding one-time items) increased 25% year-over-year for the nine months ended June 30, 2017.
- The company repurchased $5.2 billion of its class A common stock and paid $1.2 billion in dividends during the first nine months of the fiscal year.
- Total operating expenses decreased 18% to $4.57 billion for the nine months ended June 30, 2017, largely due to the absence of a significant prior-year Visa Europe Framework Agreement loss.
- Visa processed 82 billion transactions in the first nine months of fiscal 2017, a 43% increase over the prior year.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2017filed July 20, 2017Financial Statements
Q3 FY2017 against Q3 FY2016
| Line item | Q3 FY2017Q3 FY2016 | Change |
|---|---|---|
| Revenue | $4.57B$3.63B | +25.8% |
| Operating Expenses | $1.54B$3.20B | −51.9% |
| Operating Income | $3.02B$428.00M | +606.5% |
| Net Income | $2.06B$412.00M | +399.8% |
05—Questions
Frequently Asked Questions
What was the primary driver of revenue growth in this period?
The primary driver of revenue growth was the full inclusion of Visa Europe's operations following its acquisition in June 2016. This, combined with continued growth in payment volumes and processed transactions, led to a significant increase in net operating revenues.
What significant one-time items affected the company's net income?
A significant one-time item was a $1.5 billion non-recurring, non-cash income tax provision recorded in the nine months ended June 30, 2017, related to a legal entity reorganization. Other prior period adjustments included the Visa Europe Framework Agreement loss and acquisition-related costs.
How is Visa managing its capital and returning value to shareholders?
Visa is actively returning capital to shareholders through share repurchases and dividend payments. For the nine months ended June 30, 2017, the company repurchased $5.2 billion of its common stock and paid $1.2 billion in dividends. An additional $5.0 billion share repurchase program was authorized in April 2017.
What is the status of the legal proceedings mentioned in the filing?
Visa is involved in various legal and regulatory proceedings, including interchange litigation in the U.S. and the U.K. While the company believes it has strong defenses, it acknowledges that these matters could potentially have a material adverse effect on its financial position, results of operations, or cash flows. The company has an accrual for U.S. covered litigation and recorded accruals for VE territory covered litigation, which can be recovered through conversion rate adjustments.
06—Continue