Visa's Profit Rises 24% on Higher Payments Volume
January 28 2016 - 6:40PM
Dow Jones News
Visa Inc.'s earnings for its latest quarter rose 24% as the
company posted increases in payments volume and processed
transactions.
But Chief Executive Charlie Scharf said the uneven global
economy and the effects of the stronger U.S. dollar have weighed on
Visa's cross-border volume and revenue growth. He noted those
factors don't appear to be abating in the short term.
The company didn't change its financial outlook for the year but
said those issues could ultimately affect its results.
Visa's cross-border volumes grew 4% on a constant-dollar basis
in the quarter ended Dec. 31. Payments volume increased to $1.31
trillion, while the number of total processed transactions grew 8%
to 19 billion.
Visa's shares rose 2.4% after hours and are off 11% so far this
year.
In all, the company reported a profit of $1.94 billion, or 80
cents a Class A share, for its fiscal first quarter, up from $1.57
billion, or 63 cents a Class A share, a year earlier. Excluding
$255 million in income tied to a Visa Europe put option, earnings
improved to 69 cents a Class A share.
Revenue rose 5.4% to $3.57 billion, up 8% on a constant-dollar
basis. The increase was driven by higher services, data processing
and international transaction revenue.
Analysts polled by Thomson Reuters projected earnings of 68
cents a share on revenue of $3.62 billion.
Operating expenses grew 2.2% to $1.17 billion.
Spending on credit and debit cards has been strong as consumers
migrate from cash and checks to electronic payments. Visa and
competitor MasterCard Inc. don't issue cards or set interest rates,
but they charge fees to financial institutions for transactions
that travel over their networks.
Visa's digital efforts have included the launch of Visa Digital
Solutions, an initiative geared toward secure payments using mobile
devices. Visa and others have supported Apple Inc.'s Apple Pay
service.
In November, Visa said it would buy its European counterpart
Visa Europe for as much as 21.2 billion euros ($23.2 billion) in
cash and stock, a long-awaited deal that would bring the payment
network's global operations under one roof.
The acquisition will create a windfall for the 3,000 banks,
other financial firms and payment networks that own the privately
held European cooperative.
Visa's results follow Wednesday's report from Discover Financial
Services Inc., which posted a weaker-than-expected quarterly profit
as slower retail sales and low gas prices restrained growth in
credit-card loans. Meanwhile, American Express Co. last week said
its earnings were hurt by a strengthening U.S. dollar, pressure on
merchant fees and competition. The company also issued a bleak
outlook for 2017.
MasterCard is slated to report results Friday.
Write to Josh Beckerman at josh.beckerman@wsj.com
(END) Dow Jones Newswires
January 28, 2016 18:25 ET (23:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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