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.
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%|
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.
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.
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," said CEO 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."