Published
- 06:00 am
Today Visa Inc. announced financial results for the Company’s fiscal second quarter 2017, ended March 31, 2017.
Fiscal Second Quarter 2017 Key Highlights:
- GAAP net income of $430 million or $0.18 per share including special items related to the legal entity reorganization of Visa Europe
- Adjusted net income of $2.1 billion or $0.86 per share excluding special items related to the legal entity reorganization of Visa Europe
- Net operating revenue of $4.5 billion, an increase of 23%, driven by inclusion of Europe and continued growth in payments volume, cross-border volume and processed transactions
- Payments volume growth, on a constant dollar basis, was 37% over the prior year at $1.7 trillion
- Cross-border volume growth, on a constant dollar basis, was 132% or 11% inclusive of Europe in prior year results
- Total Visa processed transactions were 26.3 billion, a 42% increase over the prior year, or 12% growth inclusive of Europe in prior year results
- Newly-formed Visa Foundation funded with contribution of $192 million
- Returned approximately $2.1 billion of capital to shareholders in the form of share repurchases and dividends
- Board authorized a new $5.0 billion class A common stock share repurchase program
“In the face of geo-political uncertainty, Visa continues to execute well against our operating plan and strategic priorities, delivering sustained growth across nearly every part of our business,” said Alfred F. Kelly, Jr., Chief Executive Officer of Visa Inc. "Robust growth in payments volume, cross-border volume and processed transactions drove better than expected results. Looking ahead, we are continuing our efforts across the globe to electronify commerce and digitize economies to the benefit of consumers and societies alike.”
Fiscal Second Quarter 2017 Special Items Related to the Visa Europe Reorganization:
During the fiscal second quarter of 2017, the Company completed a legal entity reorganization of Visa Europe and certain other Visa subsidiaries to align the Company's global corporate structure to the geographic jurisdictions in which it conducts business operations. Associated with this reorganization, the Company recorded the following special items:
- $1.5 billion non-recurring, non-cash income tax provision related to the elimination of deferred tax balances originally recorded upon the acquisition of Visa Europe in June 2016; and
- $192 million non-recurring, non-cash general and administrative expense associated with the charitable donation of Visa Inc. shares that were acquired as part of the Visa Europe acquisition and held as treasury stock. The newly-formed Visa Foundation received the donation of Visa Inc. shares and the Company recognized a $71 million cash income tax benefit.
All references to earnings per share assume fully-diluted class A share count, inclusive of series B and C convertible participating preferred stock, unless otherwise noted. The Company’s adjusted quarterly operating expenses, effective income tax rate, net income and earnings per share of class A common stock are non-GAAP financial measures that are reconciled to their most directly comparable GAAP measure in the accompanying financial tables.
Fiscal Second Quarter 2017 Financial Highlights:
GAAP net income for the quarter, inclusive of special items related to the legal entity reorganization of Visa Europe, was $430 million or $0.18 per share, both decreasing 75% over the prior year's results, primarily related to the special items from the Visa Europe legal entity reorganization noted above.
Excluding special items, adjusted net income for the quarter was $2.1 billion and adjusted earnings per share was $0.86, both increasing 27% over the prior year's adjusted results. Exchange rate shifts versus the prior year negatively impacted earnings per share growth by approximately 4 percentage points. The prior year's adjusted results exclude the impact of a non-recurring, non-operating gain related to currency forward contracts.
Net operating revenue in the fiscal second quarter of 2017 was $4.5 billion, an increase of 23%, driven by the inclusion of Europe and continued growth in payments volume, cross-border volume and processed transactions. Exchange rate shifts versus the prior year negatively impacted reported net operating revenue growth by approximately 2.5 percentage points.
Payments volume growth, on a constant dollar basis, for the three months ended December 31, 2016, on which fiscal second quarter service revenue is recognized, was 39% over the prior year at $1.8 trillion. Effective with the three months ended December 31, 2016, Europe co-badge volume is no longer included in reported volume.
Payments volume growth, on a constant dollar basis, for the three months ended March 31, 2017, was 37% over the prior year at $1.7 trillion.
Cross-border volume growth, on a constant dollar basis, was 132% for the three months ended March 31, 2017. Cross-border volume growth, on a constant dollar basis and inclusive of Europe in prior year results, was 11%.
Total processed transactions, which represent transactions processed by Visa, for the three months ended March 31, 2017, were 26.3 billion, a 42% increase over the prior year. Total processed transactions growth was 12%, inclusive of Europe in prior year results.
Fiscal second quarter 2017 service revenues were $2.0 billion, an increase of 17% over the prior year, and are recognized based on payments volume in the prior quarter. All other revenue categories are recognized based on current quarter activity. Data processing revenues rose 25% over the prior year to $1.8 billion. International transaction revenues grew 41% over the prior year to $1.5 billion. Other revenues were $203 million, an increase of 3% over the prior year. Client incentives, which are a contra revenue item, were $1.0 billion and represent 18.7% of gross revenues.
GAAP operating expenses were $1.7 billion for the fiscal second quarter 2017, a 40% increase over the prior year's results, primarily driven by increases in general and administrative expense related to the charitable donation to the newly-formed Visa Foundation. Adjusted operating expenses, which excludes the charitable donation, were $1.5 billion, an increase of 24% over the prior year's results, primarily from the inclusion of Visa Europe's operating expenses following the acquisition.
GAAP effective income tax rate was 84.1% for the quarter ended March 31, 2017, including the $1.5 billion non-recurring, non-cash income tax provision related to the elimination of deferred tax balances originally recorded upon the acquisition of Visa Europe and the $71 million tax benefit related to the charitable donation. Adjusted effective income tax rate was 28.6%, excluding the aforementioned items.
- 09:00 am
Sionic Mobile, provider of the fast-growing Mobile Rewards Marketplace and ION Commerce Engine™ (ICE) mobile loyalty and payments platform, has named Nat Milburn as managing director of Enterprise Development.
“I am thrilled to join the executive team at such a pivotal time in the Company’s rapid growth stage,” Milburn said. “Helping Sionic Mobile attain its Marketplace goal of 2.5 million merchant locations and 200 million loyalty app users is a phenomenal opportunity.”
Milburn comes from Revel Partners, a NYC-based early-stage venture capital firm that invests in digital marketing and advertising technology entrepreneurs. There, he was vice president for Institutional Fund Raising and Business Development where he led the firm’s first major engagement of Institutional Investors for its $125M Fund II. He also served as interim president of Nexosis, Revel Partners’ first investment from Fund II. For Nexosis, a machine learning/artificial intelligence (AI) start-up, Milburn developed its enterprise-focused go-to-market strategy, sales and marketing strategy and business plan.
Ronald Herman, CEO of Sionic Mobile, said, “Nat’s demonstrated track record and expertise in both marketing technologies and developing digital media strategies, as well as his experience in building brand awareness and driving consumer engagement will be instrumental as we aggressively expand the Marketplace.”
Other previous experience for Milburn includes Founder and Managing Director of Dragonfly Growth Partners, and several senior executive positions at Newell Rubbermaid, The Coca-Cola Company and E&Y Consulting.
James Ray, Chase Merchant Services managing director for Enterprise Solutions, added, “Nat is an excellent addition to the Sionic Mobile team. Having worked with him previously, I am pleased to have him as the key liaison for our relationship. Removing friction from our client’s check-out process is paramount, and with Sionic Mobile’s simple and secure method for accepting mobile payments (including integrated loyalty and rewards) we can deliver to them a unique and highly attractive option. Our respective teams are working in tandem to ensure that our enterprise clients optimize their consumer experience.”
- 08:00 am
goHenry, the UK's first fully digital family banking solution designed to help young people manage their money, has appointed Featurespace, the leading machine learning Adaptive Behavioural Analytics fraud prevention company, to safeguard customers’ accounts and reduce fraudulent transactions.
goHenry was founded with a mission to make the next generation of young people better at managing their money. It is a subscription service, which provides 6 to 18 year olds with a prepaid debit card and app with unique parental controls.
Parents can use the goHenry app to easily manage pocket money, set spending limits and rules on where the card can be used, and much more. These tools are designed to help children and teens learn to earn, save and spend responsibly, while giving parents peace of mind and an easy way to manage their children's pocket money.
By partnering with Featurespace, goHenry can ensure equally innovative full fraud and risk protection to its customers.
Louise Hill, goHenry COO, commented:
“We are delighted to be working with Featurespace to ensure that our customers are even better protected. Featurespace’s industry leading technology ensures that goHenry continues to lead the market.”
Martina King, Featurespace CEO, commented:
“Protecting goHenry’s young savers from fraudsters is an inspiring application of our machine learning technology - safeguarding children’s pocket money and giving parent’s peace of mind.
“goHenry offers a unique tool for parents to teach their children to earn, save and spend responsibly and we are very proud to be providing an equally pioneering fraud prevention solution.”
- 03:00 am
The Australian Securities and Investments Commission (ASIC) and Indonesia's Otoritas Jasa Keuangan (OJK) have entered a Cooperation Agreement to promote innovation in financial services in their respective markets.
The framework for cooperation under this Agreement is a positive confirmation of the strong and longstanding relationship between the two regulators.
Indonesia, with the largest economy in south-east Asia, hosts a fast-growing financial technology sector. Fintechs are now impacting areas such as payments and transfers, financial management, insurance, lending and finance, retail banking and markets, exchanges and supporting services. Providers are offering services including insurance, investment, financing, peer-to-peer lending and crowd funding.
Chairman of the OJK, Pak Muliaman said: ‘I hope this further collaboration will be able to promote innovation in our financial service markets and to deepen engagement that can be used for financial sector development in both countries.'
John Price, ASIC Commissioner said: ‘Many fintechs are not constrained by national borders and it is fundamental that we leverage this to share views, exchange information and to discuss some of the challenges that this can create for fintech businesses and the community.’
'This agreement is also a further reflection of the deep ties between ASIC and OJK. We look forward to working more closely with OJK on the exciting fintech developments in both our countries,' he said.
Background
ASIC is focused on the vital role that fintechs are playing in re-fashioning financial services and capital markets. In addition to developing guidance about how these new developments fit into our regulatory framework, in 2015, ASIC launched an Innovation Hub to help fintechs navigate the regulatory framework without compromising investor and financial consumer trust and confidence.
The Innovation Hub provides the opportunity for entrepreneurs to understand how regulation might impact on them. It is also helping ASIC to monitor and understand fintech developments.
ASIC collaborates closely with other regulators to understand developments, and to help entrepreneurs expand their target markets into other jurisdictions. Fintech cooperation agreements have been signed with a number of other regulators, including the Monetary Authority of Singapore, the United Kingdom’s Financial Conduct Authority, the Ontario Securities Commission and Capital Markets Authority, Kenya.
- 01:00 am
AnaCap Financial Partners, the specialist European financial services private equity firm, has acquired Ellisphere, a leading French business intelligence company, from Natixis SA.
Ellisphere is positioned in an attractive and stable segment of the French market where it has established a strong track record and reputation for quality and excellence in addressing its clients’ needs. There is strong potential for growth in Ellisphere’s stable and recurring revenue streams through expanding value-added products and services to existing clients and via the growth of its overall client base. In addition, AnaCap plans to support the business in its expansion with new products aimed at SMEs.
Ellisphere has continued to expand its products and services centred around its core business intelligence activities under a new management team appointed in 2014. The company is headquartered in Nanterre and employs more than 300 staff across eight locations in France.
Nassim Cherchali, Director at AnaCap, commented:
“This is an extremely attractive platform which adds to our growing investment track record in France. Ellisphere offers a unique position in the French market with direct access to a diversified base of clients and significant potential for expansion. We are delighted to be partnering with a highly experienced and motivated management team led by Valérie Attia.”
Valérie Attia, Ellisphere CEO, commented:
“We are extremely proud of the progress we have made over the past three years, during which time we have refocused the company on its core business intelligence offering and continued to enhance our client service proposition. We are delighted to be joining forces with AnaCap, which will allow us to build further what is already the most extensive service offering in the credit management sector in France, based on high value-added services, innovation and operational optimisation.”
- 06:00 am
Delegates gathered at the Springfields Events & Conference Centre on Wednesday 19th April for the event, organised by Datcom, chartered accountants Duncan & Toplis and Barclays Bank. The crowd heard from Datcom’s Business Development Manager Hannah Sang, Datcom Account Manager Andy Maddison and Barclays Regional Digital Eagle Anthony McGhie.
Hannah Sang suggested that owing to the advent of big data, more individuals and businesses are now more at risk. Hannah also added that the GDPR (General Data Protection Regulation) enters legislation in 2018, which could be significant for business.
The GDPR is an EU regulation which means businesses involved with information transfer to EU companies must have adequate protection in place. Not being protected means you could be heavily fined if a breach takes place, even if you are a third party.
Andy Maddison offered delegates advice on password use, data protection and ways to stop potential attacks.
He said: “One of the best ways to protect yourself from breaches is to have adequate measures in place. We always recommend two-stage authentication, having firewalls updated and using the latest in anti-virus software.
“Using applications and software that have security measures included is extremely useful. For example, Office 365 by Microsoft has a feature that means threats via your inbox are stopped before they get to you.”
Andy added that there are more than 65,000 open ports on the average computer. This means that having a business-spec firewall is integral to businesses being protected against threats. He also stressed the importance of backing up servers and keeping them up to date.
Anthony McGhie from Barclays talked about the bank’s schemes for preparing customers for the future. These include introductions to online banking for customers in branch and providing coding sessions for children.
Anthony also spoke about security, looking out for fraudulent emails, identifying threats and remaining cautious. He suggested that criminals are now employing advanced methods of research, using social engineering to find out personal details or security protocols to commit fraud.
- 01:00 am
Today Kaizen Reporting is delighted to report that it has won a Queen’s Award for Enterprise, the highest accolade in UK business, for our ReportShield data testing service. Kaizen’s award comes in the innovation category for the prestigious business awards which are announced today.
Kaizen CEO and Founder, Dario Crispini, said, “Winning a Queen’s Award for innovation is a huge honour and recognition of the uniqueness of our ReportShield testing approach and how it is helping financial firms get their regulatory reporting correct.”
Since the financial crisis in 2007, regulatory trade and transaction reporting has become an increasingly vital tool for regulators to detect insider dealing, rogue trading and the build-up of systemic risk which was one of the primary causes of the crisis.
However regulatory reporting is becoming increasingly complex and financial firms have struggled to get it right. This results, in some cases, in regulatory fines running into millions of pounds and costly bills to retrospectively fix the errors.
In response to this, Dario, a former regulator, and Ian Rennie, industry expert, set up Kaizen Reporting in 2013 to help improve the quality of firms’ regulatory reporting. By combining their regulatory knowledge with data science, the company has developed an automated service, ReportShield, that fully assesses the quality of regulatory reporting data.
The service tests 100% of regulatory reports in contrast to traditional testing methods which only test small amounts of data. This in-depth testing gives Kaizen clients full sight of any errors within their reporting data so they can be corrected.
Dario continues, “Incorrect regulatory reporting is a major industry problem that Kaizen wants to help solve. ReportShield is helping both sides of the industry – firms can be confident of their reporting integrity and avoid fines, and the regulator receives good quality transaction reports, ensuring market transparency.
- 09:00 am
Today Bloomberg and Bats Europe have reported they plan to provide Bloomberg customers with the ability to use their respective Approved Publication Arrangements (APA)[1] to fulfil MiFID II transparency reporting requirements. Under MiFID II, market participants are facing a steep increase of reporting tasks they need to manage, for firm quotes as well as executed transactions, across a wide range of asset classes and within very short timeframes.
"We are pleased to be working with Bats Europe, whose well-established position in equity reporting will complement Bloomberg's expertise in providing workflow solutions across the non-equity asset classes. Our Regulatory Hub is designed to help clients fulfil their reporting requirements, while providing a single data entry point into our integrated, MiFID II solutions," said Alejandro Perez, Global Head of Post-Trade Solutions.
Bats Europe, a CBOE Holdings, Inc. company, operates the largest equities exchange and trade reporting facility in Europe. Bats’ trade reporting facility, which will become an APA for MiFID II, handles approximately 60% of all OTC equities trade reporting across the region and covers nearly 13,000 European equities and exchange-traded products. Additional information on Bats’ trade reporting services is available on the Bats website.
“We believe this collaboration with Bloomberg will provide a simple, effective way for market participants to fulfil their range of trade reporting obligations under MiFID II,” said Jerry Avenell, Co-Head of Sales at Bats Europe. “With the new reporting regulations coming into effect in less than nine months, we know that firms are looking for easy-to-implement solutions to meet these regulatory requirements. We believe this offering with Bloomberg will help streamline MiFID II preparations for many market participants.”
Bloomberg's Regulatory Hub (RHUB) is a full service platform for regulatory reporting-related requirements connecting to the Bloomberg Approved Publication Arrangement (APA)[2] and Approved Reporting Mechanism (ARM)[3] for transparency and transaction reporting. RHUB will accept information from multiple venues and will also serve as the single point of entry to receive customer data for the integrated Bloomberg MiFID II workflow solutions. It will provide full front to back service and synchronization with Bloomberg’s order management systems, best execution solution, surveillance, trade reconstruction and record-keeping solution, and many other regulatory services.
- 01:00 am
Today QuantHouse, the global provider of advanced trading solutions, announced that Metori Capital Management has selected QuantFACTORY to automate its trading portfolio. QuantHouse provides end-to-end systematic trading solutions including QuantFEED, its ultra-low latency market data technologies, QuantFACTORY, its algo-trading development framework and QuantLINK, its proximity hosting and order routing services. QuantHouse helps trading venues, hedge funds, market makers, proprietary desks, brokers and sell-side firms achieve optimal trading performance.
Nicolas Gaussel, CEO and Co-CIO, Metori Capital, said, “Lyxor’s Epsilon team has been working with QuantHouse over the years through its QuantFACTORY technology, allowing full portfolio trading automation making them the natural choice to automate Metori Capital’s trading portfolio solution. We have been impressed by the technology’s performance, resilience and stability, and look forward to working together as we go into operation this year.”
Stephane Leroy, Business Co-Founder and Chief Revenue Officer, QuantHouse, added, “We are delighted to welcome Metori Capital to the QuantHouse client community. In today’s trading environment, both trading ideas and speed to market are of the essence. Firms must be able to test, develop and launch new trading strategies as quickly as possible ensuring the highest level of risk control. We’re delighted to work with Metori Capital to help them achieve full trading automation and business performance.”
- 03:00 am
Today best Innovation Group (BIG), a credit union innovation catalyst with 20 years of payments experience, announced that Suncoast Credit Union has signed to offer SetIt Credit — a card management tool designed to improve cardholder experience in an easy-to-use, secure platform.
SetIt Credit, a new solution from BIG, offers an easily integrated online banking tool with a one-click approach for updating customer addresses and other important information, including new card account numbers and billing relationships, across multiple channels. SetIt Credit helps credit unions reinforce member engagement and enrich insights on member spending habits.
As consumers increasingly shop online and pay bills with debit and credit cards, it’s more important than ever for financial institutions to ensure card use and to maintain up-to-date cardholder information. Credit unions face particular challenges when competing with institutions with greater marketing reach.
“We at SetIt Credit are excited to partner with an innovative credit union like Suncoast to move the meter on drivers of interchange growth in today's environment, like app-to-card ratio,” explained BIG CEO and co-founder John Best.
“The payment card business continues to get more competitive, and as our members shift a greater share of their payments to online and app-based merchants they need help keeping those credentials current,” said Ted Hassenfelt, Suncoast’s Chief Information Officer. “We see SetIt Credit as a real win-win in that regard.”
Suncoast will also be the first financial institution to leverage SetIt Credit’s newly released application program interface (API) set. This will allow the credit union to bring these valuable features to market more rapidly, through its existing channels, with less development effort.
