) fiscal fourth-quarter 2012 (ended September 30, 2012) operating
earnings of $1.54 per Class A common share came in modestly ahead
of the Zacks Consensus Estimate of $1.50. Additionally, the
earnings substantially exceeded prior-year quarter's earnings of
$1.27 per share, primarily due to lower share count.
Consequently, operating net income escalated 13.6% year over year
to $1.0 billion.
Meanwhile, on a GAAP basis, Visa recorded a net income of
$1.66 billion or $2.47 per share. This included the reversal of a
previously recorded special item related to tax reserves that
inflated the net income by $627 million.
Alongside, total operating revenues for the reported quarter
were $2.73 billion, up 14.6% year over year and topped the Zacks
Consensus Estimate of $2.67 billion. Growth was driven by strong
performance across all segments.
revenues increased 14.4% year over year to $1.26 billion and are
recognized based on payments volume in the prior quarter. All
other revenue categories are recognized based on current quarter
revenues spiked 14.8% over the prior-year period to $1.06
revenues, which are driven by cross-border payments volume,
climbed 5.0% over the prior-year quarter to $796 million.
revenues, earned through Visa Europe's licensing fee, were $172
million, marginally improving from $171 million in the year-ago
, which are a contra-revenue item, came in at $563 million, and
accounted for 17.1% of gross revenues.
On a constant dollar basis, payments volume increased 6% year
over year to $1.0 trillion. Total processed transactions carrying
the VisaNet brand increased 2% year over year to 14.0 billion.
Cross border volume, on a constant dollar basis, grew 10% over
However, total operating expenses surged 18.4% year over year
to $1.21 billion. Subsequently, Visa's operating income stood at
$1.52 billion versus $1.36 billion in the year-ago period.
For full-year of fiscal 2012, Visa reported operating earnings
of $6.20 per Class A common share beat the Zacks Consensus
Estimate of $6.16. Additionally, the earnings substantially
exceeded prior fiscal year's earnings of $4.99 per share.
Consequently, operating net income escalated 19.1% year over year
to $4.2 billion.
However, on GAAP net income stood at $2.14 billion or $3.16
per share versus $3.65 billion or $5.16 per share in fiscal 2011.
The decline was primarily attributable to a net litigation
settlement payment of $2.59 billion or $3.82 per share, related
to the recent multi-district litigation case. This expense was
partially offset by reversal of tax reserves of $326 million or
48 cents per share and positive impact of deferred tax adjustment
of $208 million or 31 cents a share.
Alongside, total operating revenues for the reported quarter
were $10.42 billion, up 13.4% year over year and breezed past the
Zacks Consensus Estimate of $10.37 billion. On a constant dollar
basis, payments volume increased 6% year over year to $979
billion. Total processed transactions carrying the VisaNet brand
increased 5% year over year to 53.0 billion. Results came within
Excluding the litigation expense of $4.1 billion, total
operating expenses rose 12.1% year over year to $4.18 million.
Operating margin climbed to 60% from 59% in the prior fiscal
year, although GAAP operating margin reduced to 21% in fiscal
2012. Effective tax rate was 32.9% in fiscal 2012 against 36.0%
in fiscal 2011.
As of September 30, 2012, cash and cash equivalents,
restricted cash and available-for-sale investment securities
amounted to $10.5 billion, up from $6.9 billion as of September
30, 2011, including $4.43 billion of restricted cash for
litigation escrow. Nevertheless, long-term debt remained nil.
Total shareholders' equity was recorded at $27.63 billion, up
from $26.4 billion as of September 30, 2011. Further, Visa's
operating cash flow surged to $5.0 billion in fiscal 2012 from
$3.87 billion recorded in fiscal 2011.
During the reported quarter, Visa repurchased about 2.5
million class A common shares for a total cost of $324 million.
Of these, $174 million worth of shares were bought back through
open market operation.
Additionally, the board of Visa sanctioned a new share
repurchase program worth $1.5 billion, which is set to expire by
On July 13, 2012, Visa and
) entered into a formal agreement with the federal court of
Brooklyn to settle a multi-state U.S. merchant lawsuit. About 7
million merchants or retailers had charged the card companies in
2005 for fixing prices and unduly increasing processing or
interchange fees on transactions made through debit and credit
Accordingly, Visa and MasterCard have agreed to pay about $6.6
billion to the retailers, of which Visa has incurred cash
settlement charge of $4.4 billion. This will be paid from the
company's litigation escrow account following Visa's
Retrospective Responsibility Plan (RRP).
Subsequently, on July 24, 2012, Visa deposited $150 million to
its litigation escrow account established under its RRP. This
deposit has the same economic effect on earnings per share as
repurchasing the company's class A common stock as it reduces the
as-converted class B common stock share count.
Visa also provided the financial outlook for fiscal 2013,
anticipating annual earnings per share to grow in the high teens
range. Annual net revenue growth is expected to be in the low
double-digit range. The company estimated annual operating margin
of about 60%, capital expenditure within $425-475 million and
annual free cash flow of about $5 billion.
Further, the company expects client incentives within the
range of 18.0-18.5% of gross revenues and marketing expenses to
be less than $1.0 billion. Meanwhile, tax rate is expected within
On October 24, 2012, the board of Visa declared a 50% hike in
its quarterly dividend to 33 cents per share of class A common
stock from the prior 22 cents.
Consequently, the company will pay the hiked quarterly
dividend on December 4, 2012 to the company's Class A, Class B
and Class C common shareholders of record as on November 16,
2012. This takes the annual cash dividend of Visa to $1.32 per
share, compared with 88 cents paid earlier.
On July 19, 2012, Visa declared a quarterly dividend of 22
cents per share of class A common stock, which was paid on
September 4, 2012, to the company's common shareholders of record
as on August 17, 2012.
Yesterday, Visa's arch-rival, MasterCard reported its third
quarter operating earnings per share of $6.17 outpacing the Zacks
Consensus Estimate of $5.93 and the year-ago quarter's earnings
of $5.63. Net income for the reported quarter stood at $772
million, climbing 7.8% from $717 million in the prior-year
The better-than-expected results were largely due to better
pricing, increased number of processed transactions, strong gross
dollar value (GDV) growth and lower tax rate. However,
higher-than-expected operating expenses partially limited the
Visa carries a Zacks Rank #2, implying a short-term Buy rating
and long-term Neutral recommendation.
MASTERCARD INC (MA): Free Stock Analysis
VISA INC-A (V): Free Stock Analysis Report
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