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Visa (V) Q1 Earnings Surpass Estimates, Revenues Down Y/Y
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Visa Inc. (V - Free Report) reported fiscal first-quarter 2021 earnings of $1.42 per share, which beat the Zacks Consensus Estimate by 11.8%. However, the bottom line declined 3% year over year.
Meanwhile, the company’s net operating revenues of $5.7 billion outpaced the Zacks Consensus Estimate by 3.2%. However, the top line fell 6% year over year.
Results benefited from improved payments volume and processed transactions, partly offset by decline in cross-border volumes.
On a constant-dollar basis, payments volume in the quarter was up 5% year over year. Also, processed transactions improved 4% from the prior-year quarter to 39.2 billion driven by domestic transactions.
Total cross border volume of Visa on a constant-dollar basis fell 21% year over year during the quarter. The company’s cross-border volumes excluding transactions within Europe (which drive its international transaction revenues) slumped 33% year over year on a constant-dollar basis.
Service revenues were up 5% year over year to $2.7 billion attributable to higher payments volume of the fourth quarter. On a year-over-year basis, data processing revenues were up 6% year over year to $3 billion while international transaction revenues plunged 28% from the prior-year quarter to $1.5 billion. Other revenues climbed 5% year over year to $384 million.
Client incentives of $1.9 billion grew 6% year over year.
Operating expenses declined 10% year over year to $1.8 billion attributable to lower general and administrative, marketing, and network and processing expenses coupled with reduced professional fees.
Interest expense escalated 22.5% year over year to $136 million.
Balance Sheet (as of Dec 31, 2020)
Cash and cash equivalents were $15 billion, down 7.7% from fiscal year end Sep 30, 2020.
Total assets were $80.4 billion, which declined 0.6% from fiscal year end Sep 30, 2020.
Long-term debt slid nearly 0.1% from fiscal year end Sep 30, 2020 to $21.1 billion.
Share Buyback and Dividend Update
During the quarter under review, the company made share repurchases worth $1.8 billion.
On Jan 26, 2021, the company declared a quarterly cash dividend of 32 cents per share. The dividend will be paid on Mar 1, 2021 to its shareholders of record as of Feb 12.
Business Update
In November 2020, the company unveiled that it has completed the buyout of YellowPepper. This acquisition is in line with Visa’s endeavor to bolster its “network of networks” strategy to become a single point of access for initiating multiple transaction types and enabling a secure flow of funds.
On maturity of its senior notes, the payment processor repaid $3 billion of principal in December 2020.
This month, Visa and fintech startup Plaid have called off their previously announced $5.3-billion merger after facing a legal challenge from the Department of Justice (DoJ). The said deal was announced on Jan 13, 2020.
Some other companies in the same space that have already released respective results are American Express Company (AXP - Free Report) , Mastercard Incorporated (MA - Free Report) and Discover Financial Services (DFS - Free Report) , which beat earnings estimates by 39.7%, 8.6% and 9.3%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Visa (V) Q1 Earnings Surpass Estimates, Revenues Down Y/Y
Visa Inc. (V - Free Report) reported fiscal first-quarter 2021 earnings of $1.42 per share, which beat the Zacks Consensus Estimate by 11.8%. However, the bottom line declined 3% year over year.
Meanwhile, the company’s net operating revenues of $5.7 billion outpaced the Zacks Consensus Estimate by 3.2%. However, the top line fell 6% year over year.
Results benefited from improved payments volume and processed transactions, partly offset by decline in cross-border volumes.
Visa Inc. Price, Consensus and EPS Surprise
Visa Inc. price-consensus-eps-surprise-chart | Visa Inc. Quote
Financial Performance
On a constant-dollar basis, payments volume in the quarter was up 5% year over year. Also, processed transactions improved 4% from the prior-year quarter to 39.2 billion driven by domestic transactions.
Total cross border volume of Visa on a constant-dollar basis fell 21% year over year during the quarter. The company’s cross-border volumes excluding transactions within Europe (which drive its international transaction revenues) slumped 33% year over year on a constant-dollar basis.
Service revenues were up 5% year over year to $2.7 billion attributable to higher payments volume of the fourth quarter. On a year-over-year basis, data processing revenues were up 6% year over year to $3 billion while international transaction revenues plunged 28% from the prior-year quarter to $1.5 billion. Other revenues climbed 5% year over year to $384 million.
Client incentives of $1.9 billion grew 6% year over year.
Operating expenses declined 10% year over year to $1.8 billion attributable to lower general and administrative, marketing, and network and processing expenses coupled with reduced professional fees.
Interest expense escalated 22.5% year over year to $136 million.
Balance Sheet (as of Dec 31, 2020)
Cash and cash equivalents were $15 billion, down 7.7% from fiscal year end Sep 30, 2020.
Total assets were $80.4 billion, which declined 0.6% from fiscal year end Sep 30, 2020.
Long-term debt slid nearly 0.1% from fiscal year end Sep 30, 2020 to $21.1 billion.
Share Buyback and Dividend Update
During the quarter under review, the company made share repurchases worth $1.8 billion.
On Jan 26, 2021, the company declared a quarterly cash dividend of 32 cents per share. The dividend will be paid on Mar 1, 2021 to its shareholders of record as of Feb 12.
Business Update
In November 2020, the company unveiled that it has completed the buyout of YellowPepper. This acquisition is in line with Visa’s endeavor to bolster its “network of networks” strategy to become a single point of access for initiating multiple transaction types and enabling a secure flow of funds.
On maturity of its senior notes, the payment processor repaid $3 billion of principal in December 2020.
This month, Visa and fintech startup Plaid have called off their previously announced $5.3-billion merger after facing a legal challenge from the Department of Justice (DoJ). The said deal was announced on Jan 13, 2020.
Zacks Rank & Performance of Other Players
Visa carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some other companies in the same space that have already released respective results are American Express Company (AXP - Free Report) , Mastercard Incorporated (MA - Free Report) and Discover Financial Services (DFS - Free Report) , which beat earnings estimates by 39.7%, 8.6% and 9.3%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>