01—Abstract
Summary
Summary of the 10-Q filed July 27, 2018. Cited figures are marked; the original filing is the authoritative source.
Visa Inc. reported solid financial performance for the nine months ended June 30, 2018, with net operating revenues increasing by 12% to $15.2 billiona.
This growth was driven by strong performance in service, data processing, and international transaction revenues, reflecting continued global economic growth and the ongoing shift towards electronic payments. Diluted earnings per share saw a significant increase of 68% to $3.19b, largely influenced by a substantial non-cash tax benefit from the U.S. Tax Cuts and Jobs Act. The company continued to return capital to shareholders through robust share repurchase programs and dividend payments.
Despite litigation provisions impacting reported expenses, Visa demonstrated operational resilience and financial strength. Key financial highlights include a 15% year-over-year increase in net operating revenues for the third quarter of fiscal year 2018, reaching $5.2 billionc. This growth was propelled by strong underlying business drivers like payment volumes and processed transactions.
The company's strategic investments in personnel and technology to support future growth led to a 23%d increase in total operating expenses for the nine-month period, though adjusted operating expenses showed a more moderate increase of 15%. Visa's balance sheet remained strong, with ample liquidity to fund operations and strategic initiatives.
02—Key points
Key Highlights
- Net operating revenues increased by 12% to $15.2 billion for the nine months ended June 30, 2018.
- Diluted earnings per share (EPS) grew by 68% to $3.19 for the nine-month period, significantly boosted by a $1.1 billion non-cash tax benefit from the Tax Cuts and Jobs Act.
- Total operating expenses increased by 23% to $5.6 billion for the nine months ended June 30, 2018, largely due to a $600 million litigation provision.
- The company repurchased $5.6 billion of its Class A common stock and paid $1.4 billion in dividends during the first nine months of fiscal year 2018.
- Cash flow from operating activities increased by $2.8 billion to $9.2 billion for the nine months ended June 30, 2018, demonstrating strong underlying business performance.
- Visa's investment in available-for-sale securities increased, reflecting strategic deployment of capital.
- The company maintained a strong liquidity position with $8.5 billion in cash and cash equivalents as of June 30, 2018.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2018filed July 27, 2018Financial Statements
Q3 FY2018 against Q3 FY2017
| Line item | Q3 FY2018Q3 FY2017 | Change |
|---|---|---|
| Revenue | $5.24B$4.57B | +14.8% |
| Operating Expenses | $2.35B$1.54B | +52.8% |
| Operating Income | $2.88B$3.02B | −4.6% |
| Net Income | $2.33B$2.06B | +13.1% |
05—Questions
Frequently Asked Questions
What is the primary driver of Visa's revenue growth in this period?
Visa's revenue growth is primarily driven by increases in nominal payments volume, nominal cross-border volume, and the number of processed transactions. These factors contribute to growth in service, data processing, and international transaction revenues.
How did the U.S. Tax Cuts and Jobs Act impact Visa's financial results?
The Tax Cuts and Jobs Act provided Visa with a significant one-time, non-cash tax benefit of approximately $1.1 billion from the remeasurement of deferred tax liabilities. It also imposed a $1.1 billion transition tax on certain untaxed foreign earnings. These items significantly impacted reported net income and EPS for the period.
What is the significance of the litigation provision mentioned in the report?
Visa recorded a $600 million litigation provision related to the interchange multidistrict litigation. This provision, while impacting operating expenses, is part of the U.S. retrospective responsibility plan, and under certain conditions, monetary liabilities related to this litigation can be recovered through adjustments to the conversion rates of its class B common stock.
How is Visa managing its capital and returning value to shareholders?
Visa continues to actively return capital to shareholders through substantial share repurchase programs, having repurchased $5.6 billion in the nine months ended June 30, 2018. They also consistently pay quarterly dividends, with $1.4 billion paid out in the same period.
06—Continue