Sunday, February 16, 2014

Visa Inc. Q1 2014 Earnings.

Visa Inc. Reports Fiscal Fist Quarter 2014 net income of $1.4 billion or $2.20 per diluted share, and increase of 9% and 14%. The company also made dividend payable of $0.40 per share to all holders of record of the company’s class A, class B and Class C common stock. The company repurchased 5.5 million shares during the quarter for $1.1 billion and has $4.2 billion in remaining authorization. Net operating revenue in the fiscal first quarter of 2014 was $3.2 billion, an increase of 11% over the past year, driven by growth in service revenue, data processing revenues and international transaction revenues. Nevertheless, there is 2% negative growth during the quarter due to the U.S. dollar impacted. The First Quarter 2014 financial statement shows Visa has solid revenue, net income and earnings growth.
There are some highlights have to be mention that payments volume growth for the three months ended December 31, 2013 was 12% over the prior year at $1.2 trillion. And the total processed transactions growth for the three months ended December 31, 2013 was 13% increase over the past year at $16.0 billion.
For each segment. Service revenues were $1.4 billion, an increase of 9% over the past year. Data processing revenues increased 13% over the past year to 1.3 billion. International transaction revenues, which are driven by cross-border volume, increased 11% over the past year to $891 million. Visa Europe licensing fee were $180 million, flat over the prior year.
The weighted-average number of diluted shares of class A common stock outstanding was 639 million for the quarter ended December 31, 2013. During the quarter, the company spent $1.1 billion cash to repurchase 5.5 million shares at an average price of $199.56 per share.
Looking forward to 2014, the company is the world’s largest processor of credit and debit card payments, and possesses and unmatched payment processing infrastructure. Also the stock price rose significantly during the past year. Recently, the U.S Federal Reserve involved into the fight between banks and retailers over debit-card transaction costs. And decided to cap swipe fees at 21 cents, a ceiling that could cost financial firms $8 billion a year. The company will keep their investment thesis in the 2014 which generate most of their income by service revenue, data processing revenues and international transaction revenues. Visa also keep updating the security system, which can prevent customer’s information from hacker, as the company announced to add chip into the card start from October 2015, and the zero liability policy, which means customer’s won’t have to pay any fraudulent purchases. All these protections make people more convince to use the debit and credit card in the future. I would keep the price target $235.94 base on their strong fiscal Quarter earnings.

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