Visa Earnings Drop on Charges Tied to Europe Acquisition
July 21 2016 - 5:30PM
Dow Jones News
Visa Inc.'s quarterly earnings fell 76%, hurt by charges tied to
the acquisition of its European operations, while its revenue and
payments volume rose.
"While little has changed in the global economic environment,
and cross-border commerce continues to be challenged by a strong
U.S. dollar, domestic consumer spend across the globe remains
strong and resilient," Chief Executive Charlie Scharf said.
The credit-card issuer also added $5 billion to its stock
buyback plan and unveiled a digital payment alliance with PayPal
Holding Inc. intended to make it easier for PayPal customers to pay
with Visa cards.
Visa has stepped up its digital efforts as consumers migrate to
electronic payments. Visa and other have supported Apple Inc.'s
Apple Pay service, and Visa invested in mobile-payments startup
Square Inc.
Under the deal with PayPal, consumers will be able to instantly
withdraw and move money from their PayPal and Venmo accounts to
their bank account via Visa debit cards.
In all, Visa reported a profit of $412 million, or 17 cents per
Class A share, for its fiscal third quarter ended June 30, down
from $1.7 billion, or 69 cents per Class A share, a year earlier.
Excluding one-time items related to its acquisition of Visa Europe
Ltd., earnings fell to 69 cents a share.
Revenue rose 3.2% to $3.63 billion, up 6% on a constant-dollar
basis, driven by improved payments volume.
Analysts polled by Thomson Reuters projected earnings of 66
cents a share on revenue of $3.65 billion.
Cross-border volume rose 5% on a constant-dollar basis.
Payment volume increased 10% on a constant-dollar basis to $1.3
trillion, while the number of processed transactions rose 10% to
19.8 billion.
Operating expenses, excluding items such as the Visa Europe
purchase, fell 7% to $1.17 billion, reflecting lower personnel and
marketing costs.
Visa purchased the European operations in June, a deal initially
valued at up to 21.2 billion euros ($23.4 billion) that was
designed to bring its global operations under one roof.
The company has been facing increasingly adversarial
relationships with retailers over issues including fees and the
advent of chip cards.
In June, a U.S. appeals court threw out a record-setting $7.25
billion antitrust settlement between Visa and MasterCard and
millions of retailers after determining that some merchants weren't
adequately represented.
Meanwhile, Wal-Mart Stores began blocking the use of Visa credit
cards at three Canadian stores this month in a fee dispute, while
another Wal-Mart conflict involves Visa's complaints that the
retailer secretly configured payment terminals so that only
personal identification numbers could be used.
Shares of the company, which backed its earnings and revenue
guidance for the year, rose 0.2% to $78.92 after hours.
Write to Josh Beckerman at josh.beckerman@wsj.com
(END) Dow Jones Newswires
July 21, 2016 17:15 ET (21:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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