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Visa Inc. Second Quarter Earnings Call Highlights

Author: 123jump.com Staff
Last Update: 2:35 PM ET May 17 2012
Visa Inc. reported fiscal second quarter revenues increased 15% and net income surged 21% and raised earnings outlook in the current year and reaffirmed 2013 guidance.

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Visa Inc. (V), the global payment technology provider reported second quarter revenues increased 15% to $2.6 billion from $2.2 billion in the same quarter a year ago.

Net income in the quarter surged 21% to $1.29 billion or $1.91 per diluted share compared to $881 million or $1.23 per share in the year ago.

Quarterly Earnings

- Net operating revenues increased 15% from a year ago to $2.6 billion.
- Adjusted net income increased 23% to $1.1 billion.
- Earnings per share increased 30% to $1.60.
- Client incentives in the quarter totaled 16% of gross revenue, below full year guidance and in line with expectations for the first half fiscal year.

- Service revenue was $1.2 billion, up 13% over the prior year period.
- Data processing revenue was $922 million, up 12% over the prior year''s quarter.
- International transaction revenue was up 17% to $733 million.

- Operating expenses increase 13% to $972 million and operating income gained 17%.
- Annual free cash flow in the quarter was greater than $4 billion.
- Cash, cash equivalents and investment securities of about $8.9 billion.

- Adjusted net income in the quarter increased 23% to $1.1 billion.
- Adjusted diluted earnings per share soared 30% to $1.60.
- Total operating expenses for the quarter grew 13% to $972 million.

- Marketing expenses of $170 million reflect a larger weighting to the second half of the year.
- Operating margin for the quarter was 62%, ahead of our full year guidance of 60%.
- Capital expenditures were $61 million in the quarter.

- Adjusted earnings per share accounted for incremental 31 cents from the re-measurement of net deferred tax liabilities due to the change in state tax rate and 5 cents incremental from the catch up effect of the lower ongoing tax rate.

- Worldwide credit payment volumes increased 14% and debit volumes rose 7%.
- Cross border volumes worldwide increased 16%.
- Processed transaction rose 8%.

- Visa’s total net revenues increased 15% driven by 10% increase in U.S. revenues and 21% increase in the rest of the world revenues.

- U.S. revenues growth has been supported by four consecutive quarters of double digit credit payment volume growth.

- U.S. payment volumes increased 6% and Visa has now 9 of the top 10 issuers signed from fiscal 2015 and beyond and from the volume perspective, equating to more than 75% of Visa’s credit volume.

- Visa finalized multi-year extension of co-branded card with Alaska Airlines.
- the recent merger of United and Continental Airlines created single MileagePlus credit card portfolio and with Visa as exclusive brand.

- Visa Easy Payment Service will extend its no-signature-required program in the U.S. to selected merchant categories and will increase the purchase limit to $50 from $25 to discount stores and supermarkets.

- U.S. aggregate debit volume growth increase slowed to 2% and has declined in April and Interlink is bearing the brunt of the regulatory impact.

- Visa debit business has two segments, Visa Debit or Visa Check Card and Interlink.
- Visa Debit saw a slowing volume growth in the quarter as issuers deemphasize debit reward programs.
- Interlink posted negative volume growth in each of the month in the quarter.
- In the quarter Interlink contributed to 10% of U.S. debit revenues and 2% of total company revenues.

- Visa signed with 14 of the 15 largest debit issuers to agreements that until at least 2015.

- On March 13, prior to the April 1 implementation date, the U.S. Department of Justice issued a civil investigative demand and asked additional information about PIN-authenticated Visa Debit and elements of debit strategies.

- Visa has received 4 other requests since 2007 and took between 9 and 24 months to complete and all have been resolved.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc