Visa Raises Outlook as Results Beat Views
July 20 2017 - 5:02PM
Dow Jones News
By Maria Armental
Visa Inc. raised its financial targets for the year as quarterly
results beat Wall Street expectations, driven by a higher number of
transactions.
Shares rose 1.3% to $99.37 in extended trading and have been
trading at all-time highs.
Visa, like other payment networks, processes credit- and
debit-card transactions and makes most of its money from
transaction fees. Like MasterCard Inc., which is scheduled to
report next week, Visa doesn't extend credit directly to
cardholders. Rather, banks and others issue Visa-branded cards.
On Wednesday, American Express Co. also reported quarterly
earnings above analysts' expectations, but higher expenses to keep
apace of competition continued to pressure the company's bottom
line.
San Francisco-based Visa, which has delivered a string of
earnings beats fueled by a growing credit-card market, is the
network for many in-demand credit cards, including the J.P. Morgan
Chase Sapphire Reserve card, and has also benefited from Costco
Wholesale Corp. cards' switch to the Visa network from American
Express.
Visa accounted for 59% of purchase volume on U.S. general
purpose credit and debit cards last year, compared with
Mastercard's 25% market share, according to the Nilson Report, a
trade publication.
Now, the company is taking on cash, offering up to 50
restaurants and food vendors $10,000 apiece to switch to what Visa
executive Jack Forestell calls a "journey to cashless."
In the latest period, client incentives--long-term contracts
with banks, merchants and others to expand business--were $1.1
billion, 20% of gross revenue.
Over all, profit surged to $2.06 billion, or 86 cents a Class A
share, from $412 million, or 17 cents a share, a year earlier.
Net operating revenue rose 26% to $4.6 billion.
Analysts surveyed by Thomson Reuters had expected profit of 81
cents a share on $4.36 billion in net operating revenue.
The year-ago results had been weighed down by the acquisition of
Visa's European acquisitions.
Payments volume for the quarter rose 38% on a constant-dollar
basis to $1.9 trillion, while total processed transactions rose 44%
to 28.5 billion.
But operating expenses also rose by 31% after adjustments,
largely tied to the Visa Europe acquisition.
With one quarter to go, Visa again raised financial targets for
the current business year, saying it now expects adjusted profit to
increase about 20%, compared with its earlier view of an increase
at the high end of the midteens. It also expects net revenue to
increase about 20%, up from its previous view of an increase at the
high end of 16% to 18%.
AnnaMaria Andriotis contributed to this article.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
July 20, 2017 16:47 ET (20:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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