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Visa (V) Q3 Earnings Beat Estimates, Revenues Improve Y/Y

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Visa Inc. (V - Free Report) reported fiscal third-quarter 2021 earnings of $1.49 per share, which outpaced the Zacks Consensus Estimate by 12%. The bottom line improved 41% year over year.

The company’s net revenues advanced 27% year over year to $6.1 billion in the quarter under review. The top line beat the consensus mark by 5.1%.

The quarterly results were aided by solid growth in payments volume, processed transactions and cross-border volume, partly offset by elevated operating costs.

Visa Inc. Price, Consensus and EPS Surprise

Visa Inc. Price, Consensus and EPS Surprise

Visa Inc. price-consensus-eps-surprise-chart | Visa Inc. Quote

Financial Performance

Payments volume of Visa on a constant-dollar basis climbed 34% year over year in the third quarter. Reflecting transactions processed by Visa, the company’s processed transactions grew 39% year over year to 42.6 billion courtesy of domestic transactions.

On a constant-dollar basis, the company’s total cross-border volume improved 47% year over year in the quarter. Its cross-border volume, excluding transactions within Europe, usually bolsters the company’s international transaction revenues. The metric surged 53% year over year on a constant-dollar basis.

Service revenues advanced 17% year over year to $2.8 billion driven by improved payments volume of the prior quarter. While data processing revenues climbed 32% from the prior-year quarter to $3.3 billion, international transaction revenues of $1.7 billion soared 54% year over year. Other revenues grew 31% year over year to $409 million.

Client incentives increased 41% year over year to $2.1 billion in the quarter under review.

Operating expenses of $2.1 billion escalated 12% year over year due to rise in marketing, personnel, network and processing, and depreciation and amortization expenses coupled with higher professional fees.

Interest expense declined 7.7% year over year to $131 million in the quarter.

Balance Sheet (as of Jun 30, 2021)

Visa exited the quarter with cash and cash equivalents of $18 billion, which increased 10.7% from fiscal year end Sep 30, 2020.

Total assets were $82.7 billion, up 2.2% from fiscal year end Sep 30, 2020.

Long-term debt decreased 0.4% from fiscal year end Sep 30, 2020 to $21 billion.

For nine months ended Jun 30, 2021, net cash provided by operating activities improved 34.9% from the year-ago comparable period to $11.3 billion.

Share Buyback and Dividend Update

In the quarter under review, the company bought back shares worth $2.2 billion.

On Jul 23, 2021, the company’s board of directors approved a quarterly cash dividend of 32 cents per share. The dividend will be paid on Sep 1, 2021 to its shareholders of record as of Aug 13.

Business Update

On Jun 24, 2021, Visa announced that it will acquire Tink, a European open banking platform and a third-party provider innovating and creating products and services by using customer data held by banks. The move is in sync with Visa’s efforts to be part of the Open-Banking innovation, which is being adopted by banks rapidly.

On Jul 22, 2021, Visa unveiled that it has inked a deal to acquire the global platform Currencycloud, which empowers banks and fintechs to offer innovative foreign exchange solutions for upgrading cross-border payments. The move is expected to bolster foreign exchange capabilities of Visa, and provide new use cases and payment flows.

Zacks Rank

Visa presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Business Services Sector Releases

Some other companies in the business services space that have already released respective results are Equifax Inc. (EFX - Free Report) , Fiserv, Inc. (FISV - Free Report) and IQVIA Holdings Inc. (IQV - Free Report) , which beat earnings estimates by 15.79%, 6.20% and 2.90%, respectively.


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