By Robin Sidel And Josh Beckerman
Visa Inc. reported quarterly earnings that topped Wall Street
expectations as the company posted growth in payment volume and
announced a four-for-one stock split.
The increase, which sent shares up in after-hours trading, came
despite lower gasoline prices that cut into consumer spending at
the pump and a strengthening U.S. dollar that took a bite out of
travel into the U.S. Those trends are expected to continue through
the middle of the year, company executives said.
The decision to split the company's stock is the company's first
share split since it went public in 2008. The move reduces Visa's
impact on the Dow Industrial Average and makes it cheaper for
retail investors to buy the stock. It had been the highest-priced
stock in the Dow, followed by Goldman Sachs Group Inc. and 3M
Co.
In after-hours trading, the company's shares rose about 4%
For the period ended Dec. 31, Visa reported a profit of $1.57
billion, or $2.53 per Class A share, up from $1.41 billion, or
$2.20 per Class A share, a year earlier.
Revenue rose to $3.38 billion from $3.16 billion.
Analysts polled by Thomson Reuters projected earnings of $2.49 a
share on revenue of $3.34 billion.
"While the challenges of the macro global environment don't seem
to abate, our results have remained consistent and reflect the
strength and underlying resilience of our business model," the
company said.
Visa rung up $1.25 billion in payment transactions in the
quarter ended Dec. 31, with $794 million coming from credit and
$450 million attributed to debit cards. That is up 7% from the
$1.16 billion reported in the year-earlier period.
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.
MasterCard, based in Purchase, N.Y., is scheduled to release
quarterly earnings on Friday.
Visa also reaffirmed its guidance for the fiscal year ending in
September, projecting per-share earnings growth in the midteens.
The company still expects low-double-digit percentage revenue
growth, with two percentage points of negative foreign-currency
impact.
"Overall, Visa reported a solid quarter, posting a revenue beat
and reiterating the solid guidance that was provided with last
quarter's earnings call despite materially higher foreign exchange
headwinds," Sanjay Sakhrani, an analyst at Keefe, Bruyette &
Woods, wrote in a note to investors.
Spending on credit and debit cards has been strong as consumers
migrate from cash and checks to electronic payments. Credit
quality, which was hurt badly during the financial crisis, now
stands at historically strong levels.
Visa Chief Executive Charles Scharf said that Visa customers are
saving roughly $60 a month following a 30% decline in gasoline
prices since June. Consumers are putting roughly half of that into
savings, and using the rest to reduce debt or spend on groceries,
clothing and restaurants, he said.
The company's digital efforts have included the launch of Visa
Digital Solutions, an initiative geared toward secure payments
using mobile devices. Visa said in September it planned to create
2,000 full-time technology roles and open a new technology center
in India. Visa and others have supported Apple Inc.'s Apple Pay
service.
Write to Robin Sidel at robin.sidel@wsj.com and Josh Beckerman
at josh.beckerman@wsj.com
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