10-QPeriod: Q2 FY2018

VISA INC. Quarterly Report for Q2 Ended Mar 31, 2018

Filed April 27, 2018For Securities:V

Summary

Visa Inc. reported strong financial results for the quarter ended March 31, 2018, with net operating revenues increasing by 13% year-over-year to $5.1 billion. This growth was driven by higher service, data processing, and international transaction revenues, reflecting increased payment volumes and processed transactions globally. Net income saw a significant increase of 505% to $2.6 billion, largely influenced by the one-time tax benefit from the Tax Cuts and Jobs Act, which partially offset a one-time transition tax on foreign earnings. The company continued to execute on its capital return strategy, repurchasing $2.1 billion of its Class A common stock during the quarter and maintaining a robust share repurchase authorization. Visa's solid operating performance and strategic capital allocation underscore its continued financial strength and commitment to shareholder value.

Financial Highlights

45 data points
Beta

Revenue

$5.07B

Net Income

$2.60B

51.4% Net Margin

Total Assets

$69.04B

Cash & Equivalents

$8.14B

Free Cash Flow

$2.92B

Financial Statements
Beta
Revenue$5.07B
Operating Expenses$1.74B
Operating Income$3.34B
Net Income$2.60B

Key Highlights

  • 1Net operating revenues increased by 13% to $5.1 billion for the three months ended March 31, 2018.
  • 2Service revenues grew 13%, driven by a 13% increase in nominal payments volume.
  • 3Data processing revenues increased by 15%, reflecting a 12% rise in processed transactions.
  • 4International transaction revenues saw a significant 19% increase, benefiting from strong cross-border volume growth.
  • 5Net income for the quarter was $2.6 billion, a substantial increase from $430 million in the prior year, heavily influenced by tax-related adjustments.
  • 6The company repurchased approximately $2.1 billion of its Class A common stock during the quarter.
  • 7Visa's effective income tax rate for the quarter was 19%, a significant decrease from 84% in the prior year due to the Tax Cuts and Jobs Act.

Frequently Asked Questions

The substantial increase in net income to $2.6 billion was primarily driven by a one-time, non-cash tax benefit estimated at approximately $1.1 billion resulting from the remeasurement of deferred tax liabilities due to the Tax Cuts and Jobs Act. This benefit offset a portion of the one-time transition tax on foreign earnings also related to the Tax Act.

The Tax Cuts and Jobs Act, enacted in December 2017, led to a significant reduction in the U.S. federal corporate income tax rate. This resulted in a one-time tax benefit from remeasuring deferred tax liabilities and a one-time transition tax on certain untaxed foreign earnings. These provisional accounting impacts are expected to be finalized in fiscal 2019.

Visa continues to prioritize returning capital to shareholders through share repurchases and dividends. During the quarter, the company repurchased $2.1 billion of its Class A common stock, and the board authorized an additional $7.5 billion share repurchase program. Visa also declared a quarterly cash dividend of $0.21 per share.

Visa is actively engaged in settling and defending various litigation matters. For interchange fee-related litigation, the company has reached settlement agreements with a significant portion of merchants who opted out of the 2012 Settlement Agreement and is involved in ongoing proceedings in Europe regarding interchange rates, with some cases reaching favorable judgments or being appealed.