Visa Posts Another Strong Set Of Full Year Results

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Visa (NYSE: V) reported its Q4 and full year results on Monday, October 24th. The company reported a 27.4% increase in earnings per share (EPS) for the quarter on a 19.3% increase in revenue for the quarter. Growth in transaction fees in both the U.S. market and the international market led the growth in the company’s top line.

visa q4

For the full year, the company reported a 4% decline in earnings per share on a 8.7% increase in revenue. This was largely the result of $ 1.9 billion settlement related to the Visa Europe Framework agreement. Excluding its impact, EPS grew by 26.3% for the full year. These results reflect the strength of Visa’s business.

visa 2k16

The company has a huge scale and processes more transactions and higher transaction volumes than all of its competitors. Additionally, the company is also at the forefront of innovation in payments technologies with investments in Stripe and authorize.net, two companies that help small merchants accept payments online; Visa Checkout, a service that helps customers make payments with any device; and Visa Developer Platform, a platform that provides Visa APIs and software development kits for access to some of Visa’s most popular payment products and services to allow developers to build new applications on top of them.

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Additionally, the company started operations in China last year. This is expected to significantly increase the company’s transaction volumes and help boost its profitability. Given Visa’s much higher operating margins than competitors and its reach to both customers and merchants, it has significant ability to under cut competition by lowering transaction fees and merchant fees. Consequently, its market position is expected to remain strong. Moreover, the company spends a huge amount on personnel, enabling it to hire some of the best people in the industry. This enables it to stay at the frontier of technology in the payments space. Given these strong fundamentals, the company should be able to weather the impact of FX headwinds from Europe and emerging markets, and continue to post strong growth in coming years.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Visa
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