Visa, Inc., Q4 2010 Earnings Call, Oct 27, 2010 - NYSE:V

NYSE:V

Here is a detailed list of what Jack Carsky, the former Head of Global Investor Relations at Visa Inc., said during the earnings call:

1. Welcome and Introduction:

   • Thanked everyone for joining Visa Inc.'s Fiscal Fourth Quarter and Full Year 2010 Earnings Conference Call.
   • Introduced the executives present on the call: Joe Saunders (Chairman and CEO) and Byron Pollitt (CFO).
   • Mentioned that the call was being webcast and could be accessed on the Investor Relations section of Visa's website, with a replay available for 30 days.

2. Forward-Looking Statements:

   • Reminded participants that the presentation may include forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995.
   • Stated that forward-looking statements are not guarantees of future performance and actual results could differ materially due to various factors, including economic setbacks and new financial reform regulations.
   • Mentioned that additional information regarding these factors is available in the company's SEC filings.

3. Historical Financial Information:

   • Noted that historical non-GAAP or pro forma financial information disclosed in the call is available in the financial and statistical summary accompanying the earnings press release, which can also be accessed through the Investor Relations section of the Visa website.

4. Transition to Joe Saunders:

   • Concluded his introductory remarks by turning the call over to Joe Saunders for further commentary on Visa's performance and outlook.

This summary captures the key points made by Jack Carsky during the earnings call.

Here is a detailed list of the key points made by Joseph W. Saunders during the Visa Inc. Fiscal Q4 2010 Earnings Call:

1. Fiscal 2010 Performance:

   • Visa closed fiscal 2010 with strong results, achieving net operating revenues of over $2.1 billion, a 13% increase from the previous year.
   • For the full year, net revenue reached a record $8.1 billion, up 17% from 2009.
   • Adjusted net income for Q4 was $695 million, a 35% increase year-over-year, resulting in diluted earnings per share of $0.95, a 38% increase from Q4 2009.
   • Full year adjusted net income was $2.9 billion, a 23% increase over 2009, with adjusted diluted earnings per share of $3.91, a 26% increase.

2. Shareholder Returns:

   • Visa repurchased $800 million worth of Class B stock and announced a new $1 billion share repurchase program for fiscal 2011.
   • A 20% increase in the quarterly dividend was also announced, reaffirming Visa's commitment to returning excess cash to shareholders.

3. Growth and Guidance:

   • Visa targets 11% to 15% net revenue growth and greater than 20% earnings per share growth for fiscal 2011.
   • Free cash flow guidance was raised to over $3 billion.
   • The company is focused on maintaining its industry leadership through growth and innovation, with significant investments planned in response to changes in the U.S. debit landscape.

4. Regulatory Environment:

   • Visa has been actively engaging with the U.S. government regarding financial reform, including discussions with the Department of Justice and the Federal Reserve.
   • Saunders emphasized the importance of adapting to regulatory changes and maintaining a solid foundation for growth.

5. U.S. Debit Market:

   • Saunders expressed confidence in Visa's strong leadership position in the U.S. debit market, citing superior processing technology and value-added services.
   • He acknowledged challenges but remained optimistic about Visa's ability to adapt and innovate.

6. International Expansion and Innovation:

   • Visa aims to derive 50% of its revenues from outside the U.S. by fiscal year 2015, with a focus on key markets like Brazil, Russia, and the Middle East.
   • The company is investing heavily in mobile payment technologies and has made progress in partnerships with major banks to pilot mobile payment programs.

7. CyberSource Acquisition:

   • Saunders highlighted the positive impact of the CyberSource acquisition, which is expected to enhance Visa's e-commerce capabilities and revenue.

8. Closing Remarks:

   • He reiterated Visa's commitment to being a growth company and emphasized the importance of strategic investments in areas with long-term growth potential.
   • Saunders thanked Visa employees for their contributions to the company's success in fiscal 2010.

These points encapsulate the key messages and themes presented by Joseph W. Saunders during the earnings call.

Here is a detailed summary of the key points made by Byron H. Pollitt, the former Executive VP & Chief Financial Officer of Visa Inc., during the earnings call:

1. Global Payment Volume and Transaction Trends:

   • Global payment volume growth for the June quarter was 14%, consistent with the March period.
   • U.S. payment volume growth was 14% in the June quarter, up from 13% in the March quarter.
   • For the September quarter, global payment volume growth remained at 14%, with U.S. payment volume growth slightly down to 13%.
   • Cross-border volume growth accelerated to 17% in the June quarter and was 16% in the September quarter.
   • Transactions processed over Visa's network totaled 12.1 billion in the fiscal fourth quarter, a 16% increase year-over-year.

2. Financial Highlights:

   • Gross revenues for the fourth quarter were $2.5 billion, up 15% from the previous year.
   • Net operating revenues for the quarter were $2.1 billion, a 13% increase, driven by economic recovery and CyberSource contributions.
   • Service revenues were $912 million, up 13%, and data processing revenue was $840 million, up 15%.
   • Total operating expenses for the fourth quarter were flat year-over-year at $1 million, despite the addition of CyberSource expenses.
   • Operating margin for the quarter was 53%, with a full-year operating margin of 57%.

3. CyberSource Acquisition:

   • CyberSource contributed $41 million in revenue for the quarter and $3 billion for the year, with a 36% growth rate in billable transactions.
   • The acquisition added $60 million to operating expenses in the quarter.

4. Guidance for Fiscal Year 2011:

   • Targeting net revenue growth of 11% to 15% and earnings per share growth of greater than 20%.
   • Projecting free cash flow to exceed $3 billion.
   • Anticipating a tax rate of 36.5% to 37% for the full year.
   • Capital expenditures are expected to be between $250 million and $275 million.

5. Incentives and Marketing Expenses:

   • Volume and support incentives as a percentage of gross revenue were 17%, slightly higher than the expected range of 16% to 16.5%.
   • Marketing expenses are projected to be under $900 million for fiscal year 2011, down from the previous $1 billion guidance.

6. Impact of Financial Reform:

   • The guidance for fiscal year 2011 reflects assumptions about the impact of financial reform, particularly in the fourth quarter.
   • The company is waiting for more clarity on the rules from the Federal Reserve before providing detailed guidance for fiscal year 2012.

7. Long-term Outlook:

   • Emphasized the importance of international expansion and innovation as key growth priorities.
   • Visa aims to derive 50% of its revenues from outside the U.S. by fiscal year 2015.
   • Investments will focus on key markets like Brazil, Russia, and the Middle East.

8. Mobile Payments:

   • Visa is actively working on mobile payment solutions and is collaborating with major banks to pilot and commercialize these programs.
   • The company is optimistic about the growth potential of mobile payments and its integration with Visa's existing infrastructure.

Byron H. Pollitt's comments reflect a strong performance in fiscal 2010, a positive outlook for fiscal 2011, and a commitment to innovation and international growth.