Visa Earnings: Volume Growth Drives Revenues
Visa (NYSE:V) reported its fiscal fourth quarter earnings on Wednesday, October 29. The company reported net income of $1.1 billion, compared to $1.2 billion a year ago. However, net income adjusted for the company’s responsibility plan and tax benefits increased 14% year-over-year to $1.4 billion for the quarter. [1] Adjusted earnings per diluted share for the quarter stood at $2.18, up 17% over the previous year. The company’s revenues also grew by 10% year-over-year on a constant dollar basis on the back of consistent growth in payments volume, which was slightly softened by FX headwinds. [2]
We believe that Visa’s growth, which it has been able to register in a tepid economic environment, will pick up as economic conditions become more favorable going forward. In addition, emerging markets outside of the U.S. will continue to provide a high fertile ecosystem for growth in the long term. The company’s stock spiked by over 10% after the earnings release on the back of favorable growth in key metrics during the quarter as well as the share repurchase program that was announced. We have a price estimate of $217 for Visa’s stock, which slightly below the current market price.
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Volumes, Transactions Maintain Growth Momentum
During the quarter, payment volume increased by about 10% year-over-year on a nominal basis. Growth in the U.S. was around 10%, compared to 13% year-over-year growth internationally. The number of processed transactions also grew by about 9% year-over-year to nearly 17 billion in the quarter ended September. Growth in the U.S. was 8%, compared to 14% year-over-year growth coming from international operations.
On a nominal basis, the company’s cross border volume increased by about 9% year-over-year. [3] The growth was led by an increase in travel activity, though political tension in the Ukraine and Russia did affect travel to the region, in turn impacting cross border volumes. The company expects volumes to sustain their growth momentum, though cross border transactions volume will continue to feel a pinch from ongoing geopolitical tension.
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More Trefis Research
- Visa Inc. Q4 2014 Financial Results Conference Call – Presentation, Investor Relations [↩]
- Visa Inc. Reports Strong Fiscal Fourth Quarter Adjusted Earnings Per Share Growth of 17% and Full-Year 2014 Adjusted Earnings Per Share Growth of 19% and Announces a New $5.0 Billion Share Repurchase Program, Visa Press Release [↩]
- Visa Inc. Cross Border Volume Growth Disclosure, Investor Relations [↩]