Visa Inc. Delivers 25% Revenue Growth

By Joe Tenebruso Markets Fool.com

Visa (NYSE: V) reported fiscal first-quarter results on Feb. 2. The world's largest credit card network is enjoying strong revenue and earnings growth as it integrates its Visa Europe business.

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Visa results: The raw numbers

Metric Q1 2017 Q1 2016 Year-Over-Year Change
Revenue $4.461 billion $3.565 billion 25%
Net income $2.070 billion $1.941 billion 7%
Earnings per share $0.86 $0.80 7%

Data source: Visa Q1 2017 earnings press release.

What happened with Visa this quarter?

Net operating revenue surged 25% year over year to $4.5 billion, as the payments giant completed its second full quarter with the recently acquired Visa Europe operations included in its results.

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Image source: Getty Images.

Service revenue, which is recognized based on payment volume in the prior quarter, rose 17% to$1.9 billion, as payments volume jumped 44% to $1.9 trillion on a constant dollar basis.

Data processing revenue increased 28% to$1.9 billion, with the number of transactions processed on Visa's network (including Visa Europe) climbing 44% to 27.3 billion. Total processed transactions -- adjusted to exclude the impact of Visa Europe -- grew 13% year over year.

International transaction revenue leapt 44% to$1.5 billion, with constant currency cross-border volume soaring 140%(12% when normalizing for Visa Europe).

Client incentives, which are a contra revenue item, were $1 billion. That figure represented 18.9% of gross revenue, compared with 18.1% in the prior-year period.

Total operating expenses increased 16% to $1.4 billion, mainly because of costs associated with the acquisition of Visa Europe and higher marketing expenses.

All told, net income -- adjusted to exclude non-recurring items related to the Visa Europe deal -- rose 23% to $2.1 billion, or $0.86 per share.

Looking forward

Visa affirmed its financial outlook for fiscal 2017, including:

  • Net revenue growth of 16% to 18%.
  • Operating margin in the "mid-60s".
  • EPS growth in the low 30% range on a GAAP basis and "mid-teens" on an adjusted basis.

"Visa's fiscal 2017 is off to a terrific start, with a strong first quarter of revenue and earnings growth driven by accelerating growth in payments volume, cross-border commerce, and processed transactions in virtually all regions around the world," saidCEO Alfred Kelly in a press release. "As we look ahead, we continue to see good momentum in the business driven by domestic and cross-border volumes, increasing consumer participation in electronic payments in developing markets, and the further acceleration of e-commerce in developed markets."

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Joe Tenebruso has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Visa. The Motley Fool has a disclosure policy.