Visa Raises Outlook as Results Beat Views -- 2nd Update
July 20 2017 - 7:27PM
Dow Jones News
By Maria Armental and AnnaMaria Andriotis
Visa Inc. raised its financial targets for the year as its
quarterly results beat Wall Street expectations, driven by a higher
number of transactions.
Profit surged to $2.06 billion, or 86 cents a Class A share,
from $412 million, or 17 cents a share, a year earlier when results
were hurt by charges related to the acquisition of its European
operations. Net operating revenue rose 26% to $4.57 billion.
Analysts surveyed by Thomson Reuters had expected profit of 81
cents a share on $4.36 billion in net operating revenue.
Visa shares, which have been trading at all-time highs, rose
1.2% to $99.37 after hours.
Operating expenses rose by 31% after adjustments, largely tied
to the Visa Europe acquisition that the company completed in June
2016.
San Francisco-based Visa has delivered a string of earnings
beats fueled by a growing credit-card market. Payments volume for
the quarter rose 38% from a year prior on a constant-dollar basis
to $1.9 trillion, while total processed transactions rose 44% to
28.5 billion.
Visa 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 processes credit- and debit-card
transactions and makes most of its money from transaction-related
fees.
The company is also benefiting from the global economic
recovery, said Vasant Prabhu, Visa's chief financial officer, on
the company's earnings call. Visa's cross-border volume increased
11% on a constant dollar basis from a year prior when Europe is
included in last year's results.
Visa is also trying to make inroads in China. Chief Executive Al
Kelly provided updates on the company's long-running effort to
enter the Chinese market. Mr. Kelly said on the earnings call that
the company filed an application on Wednesday with the People's
Bank of China for a domestic license. The company has been trying
to get more of its cards to be issued by Chinese banks to consumers
for use inside the country.
The U.S. and Chinese governments reached an agreement in May
that is supposed to result in more access to the Chinese economy
for electronic-payments providers. That reignited hopes that Visa
and Mastercard may get more market share in China.
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%.
On the earnings call, Mr. Kelly reiterated the company's
commitment to get more customers to stop using cash -- a key piece
of Visa's growth strategy. The company last week announced an
initiative that offers up to 50 restaurants and food vendors in the
U.S. $10,000 apiece to pay for technology upgrades and marketing
costs if they agree to stop accepting cash from customers.
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.
Write to Maria Armental at maria.armental@wsj.com and AnnaMaria
Andriotis at annamaria.andriotis@wsj.com
(END) Dow Jones Newswires
July 20, 2017 19:12 ET (23:12 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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