) fiscal second-quarter 2012 (ended March 31, 2012) operating
earnings of $1.60 per Class A common share outpaced the Zacks
Consensus Estimate of $1.50. Additionally, the earnings
substantially exceeded prior-year quarter's earnings of $1.23 per
share, primarily based on lower share count. Consequently,
operating net income soared 23.0% year over year to $1.08
Visa's GAAP net income for the quarter stood at $1.29 billion,
surging 46.7% from $881 million in the year-ago quarter. This
included a deferred tax adjustment of $208 million or 31 cents per
share. Besides, operating income escalated 16.1% year over year to
$1.61 billion. Meanwhile, total GAAP operating expenses rose 12.8%
year over year to $972 million, whereas the effective tax rate was
32.6% in the reported quarter.
Alongside, total operating revenues for the reported quarter
were $2.58 billion, up 14.8% year over year and exceeded the Zacks
Consensus Estimate of $2.48 billion. Growth was driven by strong
performance across all segments.
Service revenues increased 13.5% year over year to $1.24 billion
and are recognized based on payments volume in the prior quarter.
All other revenue categories are recognized based on current
quarter activity. Data processing revenues improved 12.0% over the
prior-year period to $922 million.
Besides, International transaction revenues, which are driven by
cross-border payments volume, spiked 17.5% over the prior-year
quarter to $733 million. Other revenues, earned through Visa
Europe's licensing fee, were $179 million, climbing 14.8% over the
year-ago quarter. Client incentives, which are a contra-revenue
item, were $497 million, representing 16.2% of gross revenues.
On a constant dollar basis, payments volume increased 11% year
over year to $956 billion. Total processed transactions carrying
the Visa brand increased 8% year over year to 13.0 billion. Cross
border volume, on a constant dollar basis, grew 16% year over
As of March 31, 2012, cash and cash equivalents, restricted cash
and available-for-sale investment securities totaled $8.9 billion,
up from $6.9 billion as of September 30, 2011, including $4.3
billion of restricted cash for litigation escrow. Nevertheless,
long-term debt remained nil.
Total shareholders' equity was recorded at $28.5 billion, up
from $26.4 billion as of September 30, 2011. Besides, Visa's
operating cash flow surged to $2.38 billion in the reported quarter
from $1.61 billion as of March 31, 2011. No shares were repurchased
during the reported quarter.
Visa also revised its financial outlook for fiscal 2012, and now
is anticipating annual earnings per share to grow in the high
teens-to-low twenties from the prior high teens band.
However, Visa reiterated other financial projections for 2012.
Annual net revenue growth is expected to be in the low
double-digits range. The company also continues to estimate annual
operating margin of about 60%, capital expenditure within $350-400
million and annual free cash flow of over $4 billion.
Further, the company expects client incentives within the range
of 17-18% of gross revenues and marketing expenses to be less than
$1.0 billion. While GAAP tax rate is expected within 29-30%,
adjusted tax rate is projected within 33-34%.
On April 26, 2012, the board of Visa declared a quarterly
dividend of 22 cents per share of class A common stock payable on
June 5, 2012, to the company's Class A, Class B and Class C common
shareholders of record as on May 18, 2012.
On March 6, 2012, Visa paid a quarterly dividend of 22 cents per
share to the shareholders of record as on February 17, 2012.
Besides, on December 6, 2011, Visa hiked its regular dividend by
47% to 22 cents per share from the prior dividend payout of 15
Visa continues to drive growth through increased payment volumes
along with consistent growth in processed transactions. The company
benefits from strong secular demand growth, meaningful
international exposure, high barriers to entry, excellent pricing
power and impressive operating leverage.
Although regulatory compliances as a result of the ongoing
financial overhaul in the U.S. and litigation are expected to weigh
on the financials of the company in fiscal 2012, Visa aims to
retain its strength by exploring newer growth avenues that include
mobile, eCommerce and money transfer services. Besides, expansion
into emerging international markets also supports growth. The
company is also generating strong cash flow and maintains a healthy
capital position. Visa carries a Zacks Rank #3, implying a
short-term Hold recommendation and long-term Neutral rating.
Yesterday, Visa's prime peer,
), reported first-quarter 2012 operating earnings per share of
$5.36 modestly beating the Zacks Consensus Estimate of $5.30 and
outpaced the year-ago quarter's earnings of $4.29 per share. Net
income for the reported quarter stood at $682 million, spiking
21.4% from $562 million in the prior-year quarter.
The year-over-year upbeat results were primarily due to better
pricing, an increased number of processed transactions, strong
gross dollar value (GDV) growth and lower tax rate. However,
higher-than-expected acquisition and operating expenses partially
limited the margins' upside.
MASTERCARD INC (MA): Free Stock Analysis Report
VISA INC-A (V): Free Stock Analysis Report
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