The world’s largest credit and debit card company, Visa Inc. (V, Financial), disclosed its results on Wednesday, October 29, and the results were fantastic, Â enthralling the investors and speculative analysts. It has been confirmed that both the company’s top and bottom line grew phenomenally to outpace the Street’s expectations. Soon after the fourth quarter report was released by the company, the stock market reacted positively sending the stock up 4.35% in after-hours trading session. Let’s peek into the fourth-quarter highlights and assess the performance of the company. Here’s the total story.
The interesting number mix
Revenue showed an increase of 9% over the prior-year period at $3.23 billion, even beating the analysts’ estimate of $3.19 billion. Adjusted net income came in at $1.4 billion, a 17% jump from the last year’s fourth quarter. Earnings were at $2.18 per share, brushing aside the Street’s estimates which were at $2.11 a share.
Including special items, Visa recorded $1.1 billion in net income and $1.72 a share as earnings for the quarter. On a full-year basis, Visa posted $12.7 billion in revenue which was 8% improvement compared to full-year 2013 revenue. Visa said that the strengthening of the U.S. dollar negatively impacted the top line by two percentage points.
The net income for the entire 2014 fiscal year came in as $5.7 billion, or $9.07 per share, which marked 15% and 19% growth, respectively over last year’s net income. The earnings per share for the full year beat the analysts’ estimate of $8.99 a share for the current fiscal year.
Payment volumes boost revenue rise
The company attributed the rise in revenue to the solid contributions from the service and data processing revenues. Visa CEO, Charlie Scharf stated during the conference call – “Our enviable competitive position, strong business model, and great talent helped us deliver adjusted EPS growth of 17% for the fourth quarter and 19% for the full year in the face of continued tepid economic growth and a strengthening dollar. More importantly, the underlying metrics which will drive our revenue growth over the longer term are strong and getting stronger… Our partnerships are growing, our capabilities are improving, and the opportunity for Visa to disintermediate cash across the globe is bigger than ever. Our investments in Visa Checkout, Visa Token Services and Visa Digital Solutions are just beginning to have an impact in the marketplace.”
The company stated that the payment volume grew 11% this quarter, to $1.2 trillion during the fourth quarter. Also, the total processed transactions for the full year rose 11% to 64.9 billion. This in turn shows that the burgeoning middle class is showing increased interest in Visa debit and credit cards due to which the payment volumes are improving almost every quarter.
Investor rewards continue
Visa was able to generate free cash flow of $1.5 billion during the fourth quarter of the fiscal year. The company wants to keep investors happy; therefore, during the conference call, the company announced that besides the previously announced 20% dividend boost that would increase the dividend payable to $0.48 a share from $0.40 a share, it is also authorizing a $5 billion share repurchase program. So, the investors are actually being doubly rewarded for keeping their investments intact and for trusting the company through the fiscal year.
To conclude
Visa is on an exclusive growth trajectory, and with global economies growing rapidly the global payments technology company that connects consumers, businesses, financial institutions and governments across 200 countries as on date is bound to see further improvement in both top and bottom lines. Even the outlook of the management for the upcoming 2015 fiscal year seems to be on an optimistic note, and the stock has recovered from the sluggishness after the results got announced. Thus, investors can remain calm and contented and continue maintaining or expanding their exposure to Visa’s stock in the coming months.
