Visa announced financial results for the second quarter 2016. GAAP net income, inclusive of a non-recurring, non-operating gain related to currency forward contracts, was $1.7 billion, or $0.71 per share.
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During the fiscal second quarter, the company entered into currency forward contracts to mitigate a portion of the foreign currency exchange rate risk associated with the upfront cash consideration to be paid in the anticipated Visa Europe acquisition.
As a result, the company recorded non-recurring, net unrealized gains of $116 million in non-operating income. Excluding this non-operating gain, adjusted net income for the quarter was $1.6 billion, an increase of 5% over the prior year.
"Adjusted earnings per share was $0.68, an increase of 7% nominally, or 12% in constant dollars, over the prior year.
The company’s adjusted quarterly net income and earnings per share are non-GAAP financial measures that are reconciled to their most directly comparable U.S. GAAP financial measures in the accompanying financial tables.
Net operating revenue in the fiscal second quarter of 2016 was $3.6 billion, an increase of 6% nominally or 9% on a constant dollar basis over the prior year, driven by continued growth in processed transactions and nominal payments volume.
Currency rate shifts versus the prior year negatively impacted reported net operating revenue growth by approximately 3 percentage points.
"Visa reported solid financial results in the fiscal second quarter. The continued headwinds of the strong U.S. dollar, lower oil prices, and an uneven global economy are driving continued weak cross-border spend, but domestic spend continues at reasonably strong levels consistent with last quarter.
"In fact, most of our growth metrics look very similar to what we saw last quarter. The U.S. consumer remains strong, but we see weakness in China, Brazil, and oil based economies.
"Since we are not seeing any material improvements in economic trends, we are cautious as we head into the second half of fiscal 2016.
The continued headwinds we see do not take away from the underlying growth in our business and our continued conviction in the great opportunities to grow global penetration of electronic payments for years to come," said Charlie Scharf, chief executive officer of Visa Inc. ■