10-QPeriod: Q1 FY2020

VISA INC. Quarterly Report for Q1 Ended Dec 31, 2019

Filed January 31, 2020For Securities:V

Summary

Visa Inc. reported a solid performance for the first quarter of fiscal year 2020, ending December 31, 2019. Net revenues grew by 10% year-over-year to $6.1 billion, driven by consistent growth in payment volumes and processed transactions across its global network. This top-line expansion, coupled with effective expense management, led to a 10% increase in reported net income to $3.3 billion, and a 12% rise in diluted earnings per share to $1.46. The company continues to invest in its business for future growth, which is reflected in a 14% increase in operating expenses, primarily due to higher personnel, professional fees, and R&D investments. Despite these investments, Visa demonstrated strong operating leverage and cash flow generation, with operating cash flow increasing to $3.9 billion. The company also returned significant capital to shareholders through share repurchases and dividends, underscoring its commitment to shareholder value. Notably, Visa announced its intention to acquire Plaid Inc. for $5.3 billion, signaling a strategic move to expand its reach in the digital payments ecosystem.

Financial Highlights

44 data points
Beta

Revenue

$6.05B

Net Income

$3.27B

54.0% Net Margin

Total Assets

$74.78B

Cash & Equivalents

$8.77B

Free Cash Flow

$3.88B

Financial Statements
Beta
Revenue$6.05B
Operating Expenses$2.04B
Operating Income$4.02B
Net Income$3.27B

Key Highlights

  • 1Net revenues increased by 10% to $6.1 billion, driven by strong payment volume and transaction growth.
  • 2Net income rose by 10% to $3.3 billion, with diluted EPS up 12% to $1.46.
  • 3Operating expenses increased by 14% to $2.0 billion, reflecting continued investment in personnel, professional fees, and R&D.
  • 4Cash flow from operating activities increased to $3.9 billion, indicating robust operational performance.
  • 5Visa repurchased $2.4 billion of its Class A common stock during the quarter and declared a dividend of $0.30 per share.
  • 6The company announced its agreement to acquire Plaid Inc. for $5.3 billion, signaling a strategic expansion into the fintech space.
  • 7International transaction revenues saw an increase of 9%, despite currency headwinds, with constant-dollar growth at 7%.

Frequently Asked Questions

Visa's revenue growth was primarily driven by a 10% increase in net revenues, stemming from continued growth in nominal payments volume, nominal cross-border volume, and processed transactions. Service revenues increased 9%, data processing revenues grew 16%, and international transaction revenues rose 9%.

Operating expenses increased by 14% to $2.0 billion. This rise was mainly due to higher personnel costs (up 22%) driven by increased headcount and incentive compensation, as well as increased professional fees related to merger and acquisition activities, and higher depreciation and amortization from ongoing investments and acquisitions.

The announced acquisition of Plaid Inc. for $5.3 billion is a significant strategic move for Visa. Plaid is a leading financial technology company that connects consumers to their financial accounts. This acquisition is expected to enhance Visa's capabilities in the digital payments and open banking ecosystem, expanding its product offerings and reach.

Visa continued its commitment to shareholder returns through share repurchases and dividends. During the quarter, the company repurchased $2.4 billion of its Class A common stock and declared a quarterly cash dividend of $0.30 per share.