10-QPeriod: Q3 FY2017

VISA INC. Quarterly Report for Q3 Ended Jun 30, 2017

Filed July 20, 2017For Securities:V

Summary

Visa Inc. reported strong financial performance for the nine months ended June 30, 2017, with net income increasing by 12% to $4.56 billion 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 billion. 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 billion in common stock and paying $1.2 billion in dividends during the first nine months of the fiscal year.

Financial Highlights

44 data points
Beta

Revenue

$4.57B

Net Income

$2.06B

45.1% Net Margin

Total Assets

$64.00B

Cash & Equivalents

$7.44B

Free Cash Flow

$3.54B

Financial Statements
Beta
Revenue$4.57B
Operating Expenses$1.54B
Operating Income$3.02B
Net Income$2.06B

Key Highlights

  • 1Net income grew 12% to $4.56 billion for the nine months ended June 30, 2017.
  • 2Net 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.
  • 3A $1.5 billion non-recurring, non-cash income tax provision related to a legal entity reorganization impacted net income.
  • 4Adjusted net income (excluding one-time items) increased 25% year-over-year for the nine months ended June 30, 2017.
  • 5The 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.
  • 6Total 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.
  • 7Visa processed 82 billion transactions in the first nine months of fiscal 2017, a 43% increase over the prior year.

Frequently Asked Questions

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.

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.

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.

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.