) fiscal first-quarter 2013 (ended Dec 31, 2012) operating
earnings of $1.82 per Class A common share came in modestly ahead
of the Zacks Consensus Estimate of $1.78. Additionally, the
earnings substantially exceeded the prior-year quarter's earnings
of $1.49 per share, primarily due to lower share count.
Meanwhile, on a GAAP basis, Visa recorded a net income of
$1.29 billion or $1.93 per share in the reported quarter. This
included a catch-up tax benefit effect of approximately 11 cents
Alongside, total operating revenues for the reported quarter
were $2.85 billion, up 11.7% year over year and topped the Zacks
Consensus Estimate of $2.81 billion. Growth was driven by strong
performance across all segments.
revenues increased 12.9% year over year to $1.3 billion and are
recognized based on payments volume in the prior quarter. All
other revenue categories are recognized based on the current
revenues spiked 17.2% over the prior-year period to $1.12
revenues, which are driven by cross-border payments volume,
climbed 7.6% over the prior-year quarter to $805 million.
revenues, earned through Visa Europe's licensing fee, were $179
million, marginally improving from $178 million in the year-ago
, which are a contra-revenue item, came in at $553 million, and
accounted for 16% of gross revenues.
On a constant dollar basis, payments volume increased 9% year
over year to $1.1 trillion. Total processed transactions carrying
the VisaNet brand increased 4% year over year to 14.2 billion.
Cross border volume, on a constant dollar basis, grew 11% over
the prior-year quarter.
However, total operating expenses surged 12.6% year over year
to $1.05 billion. Subsequently, Visa's operating income grew
11.3% to $1.8 billion versus $1.62 billion in the year-ago
As of Dec 31, 2012, cash and cash equivalents, restricted cash
and available-for-sale investment securities amounted to $6.1
billion, down from $10.5 billion as of Sept 30, 2012, which
included $4.43 billion of restricted cash for litigation escrow.
Nevertheless, long-term debt remained nil.
Total shareholders' equity was recorded at $27.59 billion,
down from $27.63 billion as of Sept 30, 2012. Further, Visa's
operating cash outflow stood at $2.82 billion in the reported
quarter against operating cash inflow of $1.29 billion recorded
in the year-ago quarter.
During the reported quarter, Visa repurchased about 9.0
million class A common shares for a total cost of $1.3
Concurrently, the board sanctioned a new share repurchase
program worth $1.75 billion, which is set to expire by Jan 2014.
Previously in Oct 2012, Visa had authorized a share buyback
program worth $1.5 billion, which is slated to expire in Oct
2013. Including this, the company currently has $2.9 billion
available for repurchases.
In Dec 2012, Visa paid $4.0 billion through its litigation
escrow account to settle the multi-state U.S. merchant lawsuit,
which was agreed by the company and
) in Jul 2012. 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 cards. Previously, in Oct 2012, the
company also paid $350 million to the individual plaintiffs'
Visa also reiterated the financial outlook for fiscal 2013,
anticipating the annual earnings per share to grow in the high
teens range. Annual net revenue growth is expected 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
30-32%. Visa also projected annual free cash flow of about $6
billion. This includes tax benefits to be realized during fiscal
2013 related to non-recurring litigation escrow payments of
approximately $4.4 billion that was made during the fiscal first
On Jan 30, 2013, the board of Visa declared a quarterly
dividend of 33 cents per share of class A common stock, which is
payable on Mar 5, 2013, to the company's common shareholders of
record as on Feb 15, 2013.
On Oct 24, 2012, Visa declared a 50% hike in its quarterly
dividend to 33 cents per share from the prior 22 cents. The hiked
quarterly dividend was paid on Dec 4, 2012 to the company's Class
A, Class B and Class C common shareholders of record as on Nov
16, 2012. This took the annual cash dividend of Visa to $1.32 per
share, compared with 88 cents paid earlier.
Both Visa and MasterCard carry a Zacks Rank #3 (Hold). Other
strong performers in the financial sector include
Heartland Payment Systems Inc.
), both of which carry a Zacks Rank #1 (Strong Buy).
HEARTLAND PAYMT (HPY): Free Stock Analysis
MASTERCARD INC (MA): Free Stock Analysis
MOODYS CORP (MCO): Free Stock Analysis Report
VISA INC-A (V): Free Stock Analysis Report
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