Visa beats by $0.02, reports revs in-line; lowers rev guidance, EPS growth guidance  

Reports Q2 (Mar) earnings of $0.68 per share, $0.02 better than the Consensus of $0.66; revenues rose 6.4% year/year to $3.63 bln vs the $3.6 bln  Consensus.

Updates following 2016 outlook metrics: Lowers rev growth guidance, EPS growth guidance

  • Now sees annual net revenue growth of 7% to 8% range on a constant dollar basis, with an expectation of about 3% points of negative foreign currency impact (prior guidance was for high single-digit to low double-digit range on a constant dollar basis).
  • Now sees EPS growth of low double-digits on a constant dollar basis, with an expectation of about 4 percentage points of negative foreign currency impact. This now includes interest expense of about $390 million, or over 9 cents of earnings per share, which equates to almost 4 percentage points of reduced year-over-year growth. (Prior guidance was for EPS growth in low-end of the mid-teens range on a constant dollar basis, with an expectation of about four percentage points of negative foreign currency impact). 
  • Now sees client incentives as a percentage of gross revenues in high-end of the 17.5% to 18.5% range; and adjusted effective tax rate of about 30%.
  • Visa reaffirms its financial outlook for the following metrics for fiscal full-year 2016: Annual operating margin: Mid 60s; and Annual free cash flow of about $7 billion.

Back hovering under 78 after reporting, vacillating near last week's low at 77.65. MA is down in sympathy. 

Visa reaffirms its financial outlook for the following metrics for fiscal full-year 2016: Annual operating margin: Mid 60s; and Annual free cash flow of about $7 billion.

VISA EUROPE

Visa reaches preliminary agreement to amend transaction with Visa Europe, cash consideration payable in transaction increased by €1.75 bln  

The co announced that in response to the feedback it received from the European Commission, the company and V Europe reach an agreemen in principle to amend their transaction agreement and eliminate the earn out portion of the costs.

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  • The terms of the transaction remain otherwise unchanged. Instead of an earn-out, the cash consideration payable in the transaction will be increased by €1.75 billion: €750 million payable upon closing, and €1.0 billion, plus 4% compound annual interest, payable on the third anniversary of closing.
  • While the parties continue to work toward closing as soon as possible, closing could extend beyond the end of the Company's fiscal third quarter