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Visa reported Q3 earnings and revenue that fell sharply as the coronavirus pandemic led to a global recession, plunging consumer spending. V stock is down.
American multinational financial services corporation Visa Inc (NYSE: V) stated that its non-adjusted (GAAP) net income for Q3 2020 stood at $2.4 billion or $1.07 per share while the non-GAAP net income was $2.3 billion or $1.06 per share. The net revenue of Visa in Q3 stood at $4.8 billion that represents a fall of 17%.
Visa stock fell by 1.65% after a report in after-hours trading to $193.50.
While the underlying business drivers went down on the year-over-year basis due to the continuing coronavirus pandemic, they improved each month throughout the quarter which was pretty important for payment volume and processed transactions and marginally for cross-border volume. Also, the company reported $1.6 billion of capital returned to shareholders in the form of share repurchases and dividends.
Alfred F. Kelly, Jr., Chairman and Chief Executive Officer, commented:
“We continue to focus on managing our business for the medium and long-term despite the challenges of the global pandemic. In the quarter, we were pleased to see strong growth in areas that are strategically important, including eCommerce, tap to pay, new flows and value-added services. We remain committed to our strategy and are thoughtfully investing to fuel Visa’s future performance.”
GAAP net income, therefore, decreased by 23% and 22%, respectively, over the prior year’s results. Current and prior year’s results also include $51 million and $9 million of net gains from equity investments, respectively.
Current and prior year’s results also included $17 million and $5 million, respectively, related to the amortization of acquired intangible assets and non-recurring acquisition-related costs.
Visa Q3 Net Revenue Reaches $4.8B
All references to earnings per share assume fully-diluted class A share count. Net revenues in the fiscal third quarter were $4.8 billion that represents a decline of 17%, driven by the year-over-year declines in payments volume, cross-border volume and processed transactions. Net revenues fall was hovering around 16% on a constant-dollar basis.
Payments volume for the three months ended March 31, 2020, on which fiscal third-quarter service revenues are recognized, rose 4% over the prior year on a constant-dollar basis. Payments volume for the three months ended June 30, 2020, slumped 10% over the prior year on a constant-dollar basis.
Cross-border volume excluding transactions within Europe, which drive Visa’s international transaction revenues, fell 47% on a constant-dollar basis for the three months ended June 30, 2020. Including cross-border transactions within Europe, the decline on a constant-dollar basis was 37% in the quarter. Total processed transactions, which represent transactions processed by Visa, for the three months ended June 30, 2020, were 30.7 billion, a 13% decrease over the prior year. Fiscal third-quarter service revenues were $2.4 billion, flat compared to the prior year, and are recognized based on payments volume in the prior quarter.
International Transactions Falling by 44%
Data processing revenues fell 5% over the prior year to $2.5 billion. International transaction revenues plunged 44% over the prior year to $1.1 billion. Other revenues of $314 million reflected an 8% fall over the prior year.
GAAP operating expenses stood at $1.8 billion for the fiscal third quarter, a 5% decrease over the prior year’s results, including the amortization of acquired intangible assets and non-recurring acquisition-related costs in the current and prior year. Excluding these operating expense items, non-GAAP operating expenses decreased 5% over the prior year, primarily driven by marketing and general and administrative expenses reflecting our overall cost management strategy.
No 2020 Fiscal Year Outlook
On April 2, 2020, Visa issued fixed-rate senior notes in an aggregate principal amount of $4.0 billion, with maturities ranging between 7 and 20 years, and interest rates from 1.9% to 2.7%. The weighted-average interest rate is 2.16%. The net proceeds will be used for general corporate purposes.
From the company, they didn’t want to provide a fiscal full-year outlook due to the worldwide spread of COVID-19 which has created significant uncertainty in the global economy.