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Visa (V) Q3 Earnings Beat, Revenues in Line with Estimates
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Visa Inc. (V - Free Report) posted third-quarter fiscal 2016 (ended Jun 30) earnings of 69 cents that beat the Zacks Consensus Estimate of 67 cents. The bottom line, however, saw a year-over-year decrease of 7% or 4% on a constant dollar basis.
Visa Inc. (V - Free Report) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany
Net operating revenue was $3.6 billion, up 3% year over year. Revenues were almost in line with the Zacks Consensus Estimate. The top-line growth was supported by continuous increase in processed transactions and nominal payments volume.
The stock gained about 0.08% in the after-market trading session following the outperformance. We wait to see if the momentum continues during the normal trading hours.
Revenues
On a constant dollar basis, revenues grew 6% from the year-ago period. The upside was mainly driven by higher service revenues, data processing and international transaction revenues.
Service revenues increased 6% year over year to $1.6 billion. Data processing revenues climbed 10% from the prior-year quarter to $1.5 billion.
Visa's International transaction revenues, which are driven by cross-border payments volume, jumped 4% from the prior-year quarter to $1.1 billion. Other revenues, earned through Visa Europe’s licensing fee, up 5% year over year to $209 million. Client incentives – a contra-revenue item – came in at $839 million. Notably, this item accounted for 18.8% of gross revenues.
Payments volume, on a constant dollar basis, grew 10% year on year to $1.3 trillion. Total processed transactions under the VisaNet brand increased 10% year over year to 19.8 billion. Cross-border volume, on a constant dollar basis, was up 5% from the prior-year quarter.
Adjusted operating expenses decreased 7% year over year to $1.2 billion due to fall in personnel and marketing expenses.
Financial Update
As of Jun 30, 2016, cash and cash equivalents amounted to $12.4 billion as against $3.5 billion as of Sep 30, 2015. Total assets increased to $63.9 billion from $39.4 billion as of Sep 30, 2015. Total equity was $32.8 billion, up from $29.8 billion as of Sep 30, 2015.
Share Repurchase and Dividends Update
During the quarter, Visa repurchased 21.7 million shares of Class-A common stock for $1.7 billion, at an average price of $77.53 per share.
The board of directors authorized a new $5 billion share repurchase program. The company now has $7.3 billion available for share buyback.
On Jul 19, 2016, the board declared a quarterly cash dividend of 14 cents per share of Class-A common stock, payable on Sep 6 to shareholders on record of Aug 19, 2016.
Visa Europe Acquisition
On Jun 21, 2016, Visa acquired 100% of Visa Europe at the for $13.9 billion. The acquisition is expected to enable Visa in creating additional shareholders value through increased scale and enhanced efficiencies. At the same time, the acquisition benefited Visa Europe to become a for profit organization from an association.
2016 Guidance
The Zacks Rank #2 (Buy) company included Visa Europe in its financial outlook.
For the fiscal year, the annual net revenue is expected to grow in a range of 7–8% with an adverse foreign currency impact of about 3%. The annual operating margin is anticipated to be at mid 60%. The effective tax rate is likely to be around 30%. Earnings per share is expected to grow at low double digit on constant dollar basis. Lastly, free cash flow is expected to be around $7 billion.
Among the other players from the finance sector that have reported their earnings so far, the bottom line at America Express Company (AXP - Free Report) ,and Brown & Brown Inc.’s (BRO - Free Report) beat their respective Zacks Consensus Estimate, while that of Alliance Data Systems Corporation missed the same.
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Visa (V) Q3 Earnings Beat, Revenues in Line with Estimates
Visa Inc. (V - Free Report) posted third-quarter fiscal 2016 (ended Jun 30) earnings of 69 cents that beat the Zacks Consensus Estimate of 67 cents. The bottom line, however, saw a year-over-year decrease of 7% or 4% on a constant dollar basis.
Net operating revenue was $3.6 billion, up 3% year over year. Revenues were almost in line with the Zacks Consensus Estimate. The top-line growth was supported by continuous increase in processed transactions and nominal payments volume.
The stock gained about 0.08% in the after-market trading session following the outperformance. We wait to see if the momentum continues during the normal trading hours.
Revenues
On a constant dollar basis, revenues grew 6% from the year-ago period. The upside was mainly driven by higher service revenues, data processing and international transaction revenues.
Service revenues increased 6% year over year to $1.6 billion. Data processing revenues climbed 10% from the prior-year quarter to $1.5 billion.
Visa's International transaction revenues, which are driven by cross-border payments volume, jumped 4% from the prior-year quarter to $1.1 billion. Other revenues, earned through Visa Europe’s licensing fee, up 5% year over year to $209 million. Client incentives – a contra-revenue item – came in at $839 million. Notably, this item accounted for 18.8% of gross revenues.
Payments volume, on a constant dollar basis, grew 10% year on year to $1.3 trillion. Total processed transactions under the VisaNet brand increased 10% year over year to 19.8 billion. Cross-border volume, on a constant dollar basis, was up 5% from the prior-year quarter.
Adjusted operating expenses decreased 7% year over year to $1.2 billion due to fall in personnel and marketing expenses.
Financial Update
As of Jun 30, 2016, cash and cash equivalents amounted to $12.4 billion as against $3.5 billion as of Sep 30, 2015. Total assets increased to $63.9 billion from $39.4 billion as of Sep 30, 2015. Total equity was $32.8 billion, up from $29.8 billion as of Sep 30, 2015.
Share Repurchase and Dividends Update
During the quarter, Visa repurchased 21.7 million shares of Class-A common stock for $1.7 billion, at an average price of $77.53 per share.
The board of directors authorized a new $5 billion share repurchase program. The company now has $7.3 billion available for share buyback.
On Jul 19, 2016, the board declared a quarterly cash dividend of 14 cents per share of Class-A common stock, payable on Sep 6 to shareholders on record of Aug 19, 2016.
Visa Europe Acquisition
On Jun 21, 2016, Visa acquired 100% of Visa Europe at the for $13.9 billion. The acquisition is expected to enable Visa in creating additional shareholders value through increased scale and enhanced efficiencies. At the same time, the acquisition benefited Visa Europe to become a for profit organization from an association.
2016 Guidance
The Zacks Rank #2 (Buy) company included Visa Europe in its financial outlook.
For the fiscal year, the annual net revenue is expected to grow in a range of 7–8% with an adverse foreign currency impact of about 3%. The annual operating margin is anticipated to be at mid 60%. The effective tax rate is likely to be around 30%. Earnings per share is expected to grow at low double digit on constant dollar basis. Lastly, free cash flow is expected to be around $7 billion.
VISA INC-A Price, Consensus and EPS Surprise
VISA INC-A Price, Consensus and EPS Surprise | VISA INC-A Quote
Performance of Other Stocks
Among the other players from the finance sector that have reported their earnings so far, the bottom line at America Express Company (AXP - Free Report) ,and Brown & Brown Inc.’s (BRO - Free Report) beat their respective Zacks Consensus Estimate, while that of Alliance Data Systems Corporation missed the same.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>