By Robin Sidel And Angela Chen
Visa Inc. on Thursday said profit was flat even as revenue rose
7.8% in its fiscal second quarter and payment volumes increased
11%.
Like rival MasterCard Inc., the payments network felt pressure
from a strong dollar and lower gas prices. Despite that, the
company said that spending "momentum" contributed to revenue growth
for the period ended March 31.
In a conference call with analysts, Chief Executive Officer
Charles Scharf described the results as "solid, consistent and
gratifying in the face of some of the more challenging economic
conditions and geo-political concerns we see around the world."
Visa reported a profit of $1.55 billion, or 63 cents a share,
compared with $1.6 billion, or 63 cents a share, in the same period
a year earlier. The year-earlier quarter included a one-time tax
benefit. Analysts polled by Thomson Reuters projected earnings of
62 cents a share on revenue of $3.34 billion. Shares of the company
were down more than 1% in aftermarket trading.
Revenue rose to $3.41 billion from $3.16 billion. The company
said the strengthening dollar hurt revenue growth by 2.5 percentage
points. "We expect dollar strengthening and its associated impact
to continue for the balance of the year," said Vasant Prabhu, the
company's chief financial officer, in the call with analysts.
Operating expenses grew 1% to $1.1 billion due mostly to
increased personnel, and offset by the absence of large marketing
events such as the 2014 Olympics in Sochi, Russia, or the FIFA
World Cup.
The dollar's strength, rising marketing expenses and other
issues are expected to pressure revenue and earnings growth in the
fiscal third quarter, Mr. Prabhu said. Revenue growth is expected
to return to double-digit levels in the fiscal fourth quarter, he
said.
Based in Foster City, Calif., Visa is the largest U.S. payments
network. Visa doesn't issue cards or set interest rates, but
charges fees to financial institutions for transactions that travel
over its payments network.
In the latest quarter, payment volume grew 11% to $1.2 trillion
in constant currency. Total transactions also grew 11%, to $17
billion. Data-processing revenue grew 9% to $1.3 billion, and
international revenue grew 11% to $964 million.
Mr. Scharf said about 30% of U.S. consumers surveyed by the
company are spending some of their gasoline savings on groceries
and fast-food restaurants, up from 25% in the previous quarter.
Those transactions are taking place on debit cards, but not on
credit cards, he said.
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.
The company also repurchased 16.2 million shares of class A
stock in the fiscal second quarter. To date, the company has
repurchased 28.6 million shares in the fiscal year, and has $3.8
billion of remaining funds.
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.
Write to Angela Chen at angela.chen@dowjones.com
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