Post Earnings Coverage as Visa Earnings Surge 28% and Payment Volume Soars 47%

Upcoming AWS Coverage on Mastercard Inc. Post-Earnings Results

LONDON, UK / ACCESSWIRE / November 1, 2016 / Active Wall St. announces its post-earnings coverage on Visa Inc. (NYSE: V). The company released its financial results for fourth quarter and fiscal 2016 results on October 24, 2016. The global payments processor’s earnings rose 28%, driven by growth in payments volume and processed transactions and its recent acquisition of sister company Visa Europe. Register with us now for your free membership at: http://www.activewallst.com/register/.

Visa Inc.’s closest competitor within the Business Services space, Mastercard Inc. (NYSE: MA), announced its financial results for the third quarter of 2016 on October 28, 2016. AWS will be initiating a research report on Mastercard in the coming days.

Today, AWS is promoting its earnings coverage on V; touching on MA. Get our free coverage by signing up to:

http://www.activewallst.com/registration-3/?symbol=V

http://www.activewallst.com/registration-3/?symbol=MA

Earnings Reviewed

For the three months ended on September 30th, 2016, Visa’s net income, inclusive of special items, was $1.9 billion, or $0.79 per share, an increase of 28% over the prior year’s results. During Q4 FY16, the company recorded a charge of $110 million (pretax) for severance costs; and non-cash and non-recurring $88 million gain due to the re-measurement of a deferred tax liability recorded upon the acquisition of Visa Europe. Excluding these special items, adjusted net income in Q4 FY16 was $1.9 billion, or $0.78 per share, an increase of 27% over the prior year’s results. The results beat analysts’ expectations for earnings of $0.73 per share.

GAAP net income for FY16, inclusive of special items, was $6.0 billion, or $2.48 per share, a decrease of 5% and 4%, respectively, over the prior year’s results. Adjusted net income for FY16 came in at $6.9 billion, or $2.84 per share, an increase of 7% and 8%, respectively, over the prior year’s adjusted results.

Visa’s net operating revenue for Q4 FY16 came in at $4.3 billion, an increase of 19%, driven by the inclusion of Europe and continued growth in payments volume and processed transactions. Net operating revenue for FY 2016 was $15.1 billion, an increase of 9%, driven by the inclusion of Europe and continued growth in payments volume and processed transactions.

Q4 FY16 Highlights

For Q4 FY16, Visa’s Payments volume, including Visa Europe and on a constant dollar basis, grew 47% over the prior year at $1.9 trillion. Cross-border volume growth, including Visa Europe and on a constant dollar basis, was 149% for the reported quarter. The company processed transactions worth 25.9 billion during the reported quarter, a 41% increase over the prior year. Q4 FY16 service revenues were $1.8 billion, an increase of 8% over the prior year. Visa’s Data processing revenues rose 25% over the prior year to $1.8 billion. International transaction revenues grew 36% over the prior year to $1.5 billion. Other revenues were $218 million, an increase of 1% over the prior year. Client incentives, which are a contra revenue item, were $993 million and represent 18.9% of gross revenues.

For Q4 FY16, Visa reported operating expenses of $1.6 billion, a 27% increase over the prior year’s results, primarily driven by the inclusion of Europe and increases in personnel expenses due to a charge of $110 million for severance costs. Cash, cash equivalents, and available-for-sale investment securities were $12.8 billion at September 30, 2016.

FY16

For FY16, Visa reported service revenues of $6.7 billion, an increase of 7% over the prior year. Data processing revenues rose 13% over the prior year to $6.3 billion. International transaction revenues grew 14% over the prior year to $4.6 billion. Other revenues were $823 million, flat over the prior year. Client incentives were $3.4 billion and represent 18.4% of gross revenues. GAAP operating expenses were $7.2 billion for the twelve months ended September 30, 2016, a 49% increase over the prior year’s results, primarily related to increases in personnel, network, and processing expenses, and special items incurred in all four fiscal quarters primarily related to the acquisition of Visa Europe.

Key Events during the Quarter

During Q3 2016, Visa repurchased 20.5 million shares of class A common stock, at an average price of $80.76 per share, using $1.7 billion of cash on hand. During the twelve months ended September 30, 2016, the Company repurchased a total of 92.1 million shares of class A common stock, at an average price of $77.13 per share, using $7.1 billion of cash on hand. At September 30, 2016, the Company had $5.7 billion of remaining funds, authorized by the board of directors, available for share repurchase under the current programs. On October 17, 2016, the board of directors declared a quarterly cash dividend of $0.165 per share of class A common stock payable on December 6, 2016, to all holders of record of the Company’s common and preferred stock as of November 18, 2016. Furthermore, on October 17, 2016, the Company announced that Charlie Scharf has resigned as chief executive officer effective December 1, 2016, and the board of directors appointed current board member Alfred F. Kelly, Jr. to become CEO effective December 1, 2016.

Outlook

For FY17, Visa is forecasting annual net revenue growth in the range of 16% to 18% on a nominal dollar basis, including 1.0% to 1.5% of negative foreign currency impact. The company expects Client incentives as a percent of gross revenues to be in the range of 20.5% to 21.5%. Visa is also expecting annual diluted class A common stock earnings per share growth in the low 30s on a GAAP nominal dollar basis and mid-teens on an adjusted, non-GAAP nominal dollar basis.

Stock Performance

On Monday, the stock closed the trading session at $82.51, climbing 0.35% from its previous closing price of $82.22. A total volume of 10.01 million shares have exchanged hands, which was higher than the 3-month average volume of 7.76 million shares. Visa’s stock price advanced 5.59% in the past three months, 7.27% in the previous six months, and 7.13% in the last twelve months. Furthermore, since the start of the year, shares of the company have gained 6.98%. The stock is trading at a PE ratio of 32.27 and has a dividend yield of 0.80%.

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