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Visa (V) Q3 Earnings Beat Estimates on Growing Payments Volume
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Visa Inc. (V - Free Report) reported fiscal fourth-quarter 2022 earnings of $1.93 per share, which outpaced the Zacks Consensus Estimate of $1.86 and our estimate of $1.83. The bottom line climbed 19% year over year.
Net revenues improved 19% year over year to $7,787 million during the September quarter. The top line beat the Zacks Consensus mark of $7,544 million and our estimate of $7,547.9 million.
The strong quarterly results were aided by continued growth in payments volume, cross-border volume and processed transactions. International traveling witnessed an increase during the quarter due to the stronger dollar. As such, spending on travel and entertainment rose from the year-ago period. However, elevated operating costs partly offset the upside.
Full-year fiscal 2022 net revenues were $29.3 billion, up 22% year over year. Further, full-year earnings of $7.50 per share increased 27% from the year-ago period.
On a constant-dollar basis, the payments volume of Visa rose 10% year over year in the September quarter. Processed transactions (implying transactions processed by Visa) advanced 12% year over year to 50.9 billion, despite inflation and rising interest rate worries, beating our estimate of 49.5 billion.
The total cross-border volume of Visa, on a constant dollar basis, rose 36% year over year in the quarter under review. Excluding transactions within Europe, V’s cross-border volume (that usually boosts the company’s international transaction revenues) grew 49% year over year on a constant-dollar basis.
Service revenues of $3,458 million improved 11% year over year during the September quarter, beating our estimate of $3,433.5 million, thanks to higher payments volume in the prior quarter. Data processing revenues grew 10% year over year to $3,765 million, beating our estimate of $3,669.2 million.
Other revenuesof $551 million registered year-over-year growth of 13% but missed our estimate of $610.4 million. Meanwhile, International transaction revenues jumped 52% year over year to $2,873 million in the quarter under review, beating our estimate of $2,490.3 million.
Client incentives(a contra-revenue item) increased 20% year over year to $2,860 million, beating our estimate of $2,655.6 million. The metric accounted for 26.9% of Visa’s gross revenues of $10,647 million.
Operating expenses of $2,632 million escalated 18% year over year, mainly due to higher personnel and professional fees as well as general and administrative expenses. Interest expense increased 27.2% year over year to $159 million in the September quarter.
Balance Sheet (as of Sep 30, 2022)
Visa exited the Septemberquarter with cash and cash equivalents of $15,689 million, which decreased 4.8% from fiscal year-end Sep 30, 2021.
Total assets of $85.5 billion increased 3.1% from fiscal year-end Sep 30, 2021.
Long-term debt amounted to $20.2 billion, up 1.1% from fiscal year-end Sep 30, 2021. Current maturities of debt amounted to $2.3 billion.
Total equity of $35.6 billion dropped 5.3% from the 2021 fiscal year-end.
Cash Flow
In the September quarter, net cash provided by operating activities totaled $5,876 million, which increased from $3,971 million a year ago. Free cash flow of $5,581 million climbed from $3,763 million in the year-ago period.
Capital Deployment Update
Visa rewarded $2.9 billion to shareholders to the tune of $2.1 billion in share buybacks and dividends of $794 million in the September quarter. As of Sep 30, 2022, V had leftover authorized funds of $5.1 billion under its share buyback program.
The company increased its quarterly cash dividend by 20% to 45 cents per share. It authorized a new $12 billion share buyback program.
Outlook
The company plans to extend expenses by high single digits in the coming year, which might be reduced depending on the economic and geopolitical scenarios.
Headquartered in Malvern, PA, Cantaloupe is a digital payments services provider. The Zacks Consensus Estimate for CTLP’s current year bottom line indicates a 366.7% increase from the prior-year reported number.
Based in Miami, International Money Express is a leading money remittance services provider. The Zacks Consensus Estimate for IMXI’s 2022 earnings is pegged at $1.74 per share, signaling an 18.4% jump from a year ago.
Allentown, PA-based Shift4 Payments works as a payment processing and technology solution provider. The Zacks Consensus Estimate for FOUR’s 2022 bottom line indicates 34% year-over-year growth.
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Visa (V) Q3 Earnings Beat Estimates on Growing Payments Volume
Visa Inc. (V - Free Report) reported fiscal fourth-quarter 2022 earnings of $1.93 per share, which outpaced the Zacks Consensus Estimate of $1.86 and our estimate of $1.83. The bottom line climbed 19% year over year.
Net revenues improved 19% year over year to $7,787 million during the September quarter. The top line beat the Zacks Consensus mark of $7,544 million and our estimate of $7,547.9 million.
The strong quarterly results were aided by continued growth in payments volume, cross-border volume and processed transactions. International traveling witnessed an increase during the quarter due to the stronger dollar. As such, spending on travel and entertainment rose from the year-ago period. However, elevated operating costs partly offset the upside.
Full-year fiscal 2022 net revenues were $29.3 billion, up 22% year over year. Further, full-year earnings of $7.50 per share increased 27% from the year-ago period.
Visa Inc. Price, Consensus and EPS Surprise
Visa Inc. price-consensus-eps-surprise-chart | Visa Inc. Quote
Operational Performance
On a constant-dollar basis, the payments volume of Visa rose 10% year over year in the September quarter. Processed transactions (implying transactions processed by Visa) advanced 12% year over year to 50.9 billion, despite inflation and rising interest rate worries, beating our estimate of 49.5 billion.
The total cross-border volume of Visa, on a constant dollar basis, rose 36% year over year in the quarter under review. Excluding transactions within Europe, V’s cross-border volume (that usually boosts the company’s international transaction revenues) grew 49% year over year on a constant-dollar basis.
Service revenues of $3,458 million improved 11% year over year during the September quarter, beating our estimate of $3,433.5 million, thanks to higher payments volume in the prior quarter. Data processing revenues grew 10% year over year to $3,765 million, beating our estimate of $3,669.2 million.
Other revenuesof $551 million registered year-over-year growth of 13% but missed our estimate of $610.4 million. Meanwhile, International transaction revenues jumped 52% year over year to $2,873 million in the quarter under review, beating our estimate of $2,490.3 million.
Client incentives(a contra-revenue item) increased 20% year over year to $2,860 million, beating our estimate of $2,655.6 million. The metric accounted for 26.9% of Visa’s gross revenues of $10,647 million.
Operating expenses of $2,632 million escalated 18% year over year, mainly due to higher personnel and professional fees as well as general and administrative expenses. Interest expense increased 27.2% year over year to $159 million in the September quarter.
Balance Sheet (as of Sep 30, 2022)
Visa exited the Septemberquarter with cash and cash equivalents of $15,689 million, which decreased 4.8% from fiscal year-end Sep 30, 2021.
Total assets of $85.5 billion increased 3.1% from fiscal year-end Sep 30, 2021.
Long-term debt amounted to $20.2 billion, up 1.1% from fiscal year-end Sep 30, 2021. Current maturities of debt amounted to $2.3 billion.
Total equity of $35.6 billion dropped 5.3% from the 2021 fiscal year-end.
Cash Flow
In the September quarter, net cash provided by operating activities totaled $5,876 million, which increased from $3,971 million a year ago. Free cash flow of $5,581 million climbed from $3,763 million in the year-ago period.
Capital Deployment Update
Visa rewarded $2.9 billion to shareholders to the tune of $2.1 billion in share buybacks and dividends of $794 million in the September quarter. As of Sep 30, 2022, V had leftover authorized funds of $5.1 billion under its share buyback program.
The company increased its quarterly cash dividend by 20% to 45 cents per share. It authorized a new $12 billion share buyback program.
Outlook
The company plans to extend expenses by high single digits in the coming year, which might be reduced depending on the economic and geopolitical scenarios.
Zacks Rank & Key Picks
Visa currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Business Services space are Cantaloupe, Inc. (CTLP - Free Report) , International Money Express, Inc. (IMXI - Free Report) and Shift4 Payments, Inc. (FOUR - Free Report) . While Cantaloupe sports a Zacks Rank #1 (Strong Buy), International Money Express and Shift4 Payments carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Headquartered in Malvern, PA, Cantaloupe is a digital payments services provider. The Zacks Consensus Estimate for CTLP’s current year bottom line indicates a 366.7% increase from the prior-year reported number.
Based in Miami, International Money Express is a leading money remittance services provider. The Zacks Consensus Estimate for IMXI’s 2022 earnings is pegged at $1.74 per share, signaling an 18.4% jump from a year ago.
Allentown, PA-based Shift4 Payments works as a payment processing and technology solution provider. The Zacks Consensus Estimate for FOUR’s 2022 bottom line indicates 34% year-over-year growth.