Visa (V) Q4 Earnings & Revenues Beat Estimates, Decline Y/Y

Visa Inc. V reported fourth-quarter fiscal 2020 earnings of $1.12 per share, which beat the Zacks Consensus Estimate by 2.75%. However, the bottom line declined 23.8% year over year.

Meanwhile, net operating revenues of $5.1 billion surpassed the Zacks Consensus Estimate by 1.5%. Nevertheless, the top line fell 17% year over year.

Results showed gains from payment volumes and processed transactions but a contraction in cross-border volumes.

Visa Inc. Price, Consensus and EPS Surprise

Visa Inc. price-consensus-eps-surprise-chart | Visa Inc. Quote

Financial Performance

On a constant-dollar basis, payments volume in the quarter was up 4% year over year. Processed transactions also inched up 3% from the prior-year quarter to 37.4 billion.

Visa’s cross-border volumes excluding transactions within Europe (which drive its international transaction revenues) plunged 29% year over year on a constant-dollar basis.

Service revenues were down 13% year over year to $2.2 billion due to lower payments volume of the second quarter . On a year-over-year basis, data processing revenues were up 4% to $2.9 billion while international transaction revenues plunged 38% to $1.3 billion. Other revenues rose 5% year over year to $361 million.

Client incentives of $1.7 billion were unchanged year over year.

Operating expenses declined 4% year over year to $1.94 billion, primarily due to lower marketing, professional, and general and administrative expenses.

Interest expense increased 20.8% year over year to $145 million.

Full-Fiscal Results

Net revenues of $21.8 billion were down 4%, attributable to softness in payment volumes, processed transaction and cross-border volumes.
Earnings per share of $5.04 were down 6% year over year.

Balance Sheet (as of Sep 30, 2020)

Cash and cash equivalents were $16.3 billion, up 108.3% year over year.

Total assets were $80.9 billion, up 11.5% from the prior-year comparable period.

Long-term debt was $21.7 billion, up 26% year over year.

Share Buyback and Dividend Update

During the quarter, the company made share repurchases to the tune of $1.6 billion.

On Oct 23, 2020, the company declared a quarterly cash dividend of 32 cents per share, payable Dec 1, 2020 to its shareholders of record as of Nov 13, 2020. This quarterly dividend represents a hike of 6.67%.

Business Update

The company announced that it will acquire YellowPepper. This acquisition will accelerate its network of networks strategy in Latin America and the Caribbean by significantly reducing the time-to-market and cost for issuers and processors associated with accessing innovative and interoperable solutions, regardless of who owns and operates the payment rails.

Zacks Rank and Performance of Other Players

Visa carries a Zacks Rank #3 (Hold), currently.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other stocks in the same space that already reported third-quarter earnings include Mastaercard Inc. MA and American Express Co. AXP, the bottom-line results of which missed estimates by 3.03% and 6.47%, respectively.  Earnings of Discover Financial Services DFS, however, beat the mark by 50.31%.

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