Visa Earnings: One-Time Items Weigh On Bottom Line
Visa (NYSE:V) reported its fiscal Q3 results on Thursday, July 21. The company reported 3.1% year-over-year growth in its revenue, but its net income declined by a massive 76%, resulting in an EPS decline of 75%. [1] Following the earnings, the company revised its full year forecast for earnings per share from a mid-teens growth rate to a low double-digit growth rate, on a 7% to 8% increase in revenue.
The massive drop in EPS was largely the result of a number of one-time items relating to the completion of the integration of Visa Europe into Visa’s business following its acquisition earlier this year. These include a $ 1.9 billion loss relating to the settlement of Visa Europe framework agreement, which alone accounts for around 95% of the increase in operating expenses for the quarter. In addition to this, there were several smaller items such as a payment of $92 million in stamp duty to the UK treasury, $60 million in professional fees and a $103 million gain due to favorable currency fluctuations. Excluding the impact of these items, EPS for the quarter came in at $0.69.
The core fundamentals for the business were strong, with factors such as low oil prices, weak demand from China and emerging markets, and commodity market weakness offsetting some of the gains. Global payments volume in constant dollars grew by 10%, with both international payments volume and cross border volume growing at 5%. The number of transactions processed grew by 11% in the U.S., with international transactions volume growing by 7%.
View Interactive Institutional Research (Powered by Trefis):
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
More Trefis Research