By Angela Chen
Visa Inc. said its earnings dropped 3% in the latest quarter on
higher expenses, though revenue climbed thanks to higher payment
volumes.
Shares declined 1.1% to $65.35 in after-hours trading, even as
the top- and bottom-line results beat Wall Street Estimates.
Chief Executive Charlie Scharf said the company performed well
even as the negative impacts from the strengthening of the U.S.
dollar and lower gasoline prices continued to pressure its revenue
growth.
Based in Foster City, Calif., Visa is the largest U.S. payments
network. 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.
Last month, Costco Wholesale Corp. said Visa, along with
Citigroup Inc., won the sought-after contract for its credit-card
business, replacing American Express Co., in a move that will
significantly expand the kind of plastic that is accepted at the
warehouse giant. Starting on April 1, 2016, Visa will be the only
brand accepted at Costco.
In the latest quarter, payment volume grew 11% to $1.2 trillion
in constant currency. Total transactions also rose 11%, to $17
billion. Data processing revenue increased 9% to $1.3 billion, and
international revenue grew 11% to $964 million. Other revenue, such
as the Visa Europe licensing fees, increased 12% to $204
million.
Operating expenses, however, also increased, up 1% to $1.1
billion due mostly due to increased personnel, partly offset by the
absence of large marketing events such as the 2014 Olympics in
Sochi, Russia, or the FIFA World Cup.
In all, for the period ended March 31, Visa reported a profit of
$1.55 billion, compared with $1.6 billion in the same period a year
earlier. Per-share earnings were unchanged at 63 cents. Revenue
rose to $3.41 billion from $3.16 billion.
Analysts polled by Thomson Reuters projected earnings of 62
cents a share on revenue of $3.34 billion.
The company repurchased 16.2 million shares in the quarter and
has $3.8 billion of remaining funds available under its current
buyback plan.
Visa also affirmed its guidance for the year ending in
September.
Write to Angela Chen at angela.chen@dowjones.com
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