10-QPeriod: Q2 FY2019

VISA INC. Quarterly Report for Q2 Ended Mar 31, 2019

Filed April 26, 2019For Securities:V

Summary

Visa Inc. reported solid financial performance for the quarter and six months ended March 31, 2019. Net revenues saw a healthy increase of 8% for the quarter and 11% for the six-month period, driven by growth in payments volume and processed transactions. Operating expenses also increased, primarily due to investments in personnel and ongoing business growth initiatives, but the company maintained strong operating margins. Profitability remained robust, with net income growing by 14% for the quarter and 16% for the six-month period. Diluted earnings per share (EPS) saw a corresponding increase of 17% and 19%, respectively. The company continued its strong capital return program, repurchasing a significant amount of its stock and declaring a quarterly dividend. Liquidity remains strong, with ample cash on hand and operating cash flow to meet its obligations and fund future growth. Key financial and operational metrics indicate continued positive momentum for Visa, driven by the global shift towards electronic payments and the company's extensive network and services. While operating expenses are rising, they are largely in line with strategic investments for future expansion and support of business growth.

Financial Highlights

43 data points
Beta

Revenue

$5.49B

Net Income

$2.98B

54.2% Net Margin

Total Assets

$69.86B

Cash & Equivalents

$7.65B

Free Cash Flow

$2.06B

Financial Statements
Beta
Revenue$5.49B
Operating Expenses$1.85B
Operating Income$3.64B
Net Income$2.98B

Key Highlights

  • 1Net revenues increased by 8% year-over-year to $5.5 billion for the three months ended March 31, 2019, and by 11% to $11.0 billion for the six months ended March 31, 2019.
  • 2Net income grew by 14% to $3.0 billion for the quarter and by 16% to $6.0 billion for the six-month period, demonstrating strong profitability.
  • 3Diluted earnings per share (EPS) rose by 17% to $1.31 for the quarter and by 19% to $2.61 for the six-month period.
  • 4Total operating expenses increased by 7% for the quarter and 11% for the six months, largely due to investments in personnel and general administrative costs supporting business growth.
  • 5The company repurchased approximately $1.9 billion of its Class A common stock during the quarter, with an additional $8.4 billion authorized for future repurchases as of March 31, 2019.
  • 6Visa maintained a strong liquidity position, with cash and cash equivalents, restricted cash, and restricted cash equivalents totaling $10.3 billion at the end of the period.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in nominal payments volume (7% and 8% for the three and six months, respectively) and a significant increase in processed transactions (11% for both periods). This reflects the ongoing global shift towards electronic payments and Visa's expanding network services.

Operating expenses increased by 7% for the quarter and 11% for the six months. The primary drivers for this increase were higher personnel expenses due to increased headcount, growth in general and administrative expenses supporting business expansion, and the impact of adopting new revenue recognition standards.

Visa continues to actively return capital to shareholders. During the quarter, the company repurchased $1.9 billion of its Class A common stock and declared a quarterly cash dividend of $0.25 per share. As of March 31, 2019, there was approximately $8.4 billion remaining under an authorized share repurchase program.

The U.S. retrospective responsibility plan involves an escrow account for certain litigation settlements, with a balance of $899 million at March 31, 2019. The company paid $600 million from this account during the quarter. For the Europe plan, the company recorded $162 million in VE territory covered losses, with $6 million recovered through adjustments to preferred stock conversion rates. The 'right to recover for covered losses' account within equity was $(163) million at quarter-end.