Visa's Earnings Increase 11% -- WSJ
October 26 2017 - 3:04AM
Dow Jones News
By AnnaMaria Andriotis and Allison Prang
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 26, 2017).
Visa Inc. reported an 11% increase in profit for its fiscal
fourth quarter, adding fuel to an already robust rally this year
for the card company's stock.
Earnings were $2.14 billion for the quarter, or 90 cents a
share, beating analysts' estimates of 85 cents a share. Net
operating revenue rose 14% from a year ago to $4.86 billion,
bolstered by a 10% rise in payments volume as consumer card-based
spending in the U.S. and abroad continues to rise.
The San Francisco-based company forecast robust growth for its
new fiscal year, which started Oct 1. Finance chief Vasant Prabhu
said that Visa's fiscal year 2018 outlook is for adjusted earnings
per share growth at the high end of a midteens percentage
range.
Visa shares rose about 2% in morning trading. Alongside
companies like Boeing Co. and Apple Inc., Visa's stock price --
which is up about 40% for the year -- has helped fuel a rise in the
Dow Jones Industrial Average, which crossed the 23000 threshold
this month.
Chief Executive Al Kelly said on the earnings call that several
drivers of growth contributed to the company's strong performance
over the past year. Strong economies have resulted in increased
consumer spending and the addition of Visa Europe to the company's
lineup, which Visa finished acquiring in June 2016, has also helped
to boost transaction activity on the Visa network. Before the
acquisition, Visa Europe was a separate entity that was owned by
banks and other financial firms.
Visa has also benefited from new partnerships that kicked in
last year, most notably with Costco Wholesale Corp. The store's
credit card switched from running on the American Express Co.
network to Visa in June 2016. USAA, one of the country's largest
issuers of debit and credit cards, switched to Visa from Mastercard
Inc. last year.
Year-over-year payments volume growth slowed in the fourth
quarter, rising 10% compared with the 38% year-over-year growth
Visa posted in its fiscal third quarter. Payment volume growth,
while still up in the U.S., also decelerated. Part of that is a
slowing down in the initial spike in payments volume that Visa
experienced after taking on the Costco and USAA accounts.
The hurricanes and other natural disasters that hit the
Caribbean and Mexico during this past quarter also affected
payments volume. Those effects are continuing, Mr. Prabhu said, as
travel to those areas remains down.
Visa, while a card company at its core, has been investing in
partnerships that expand its reach as a payments company -- a
strategy meant to ensure that the firm will remain a leader in
consumer spending even if fintech firms or other payment types grab
more market share. In July, it extended its partnership with PayPal
Holdings Inc. in Europe. In August, Visa said it was enabling Visa
payments on Fitbit's first smartwatch -- part of a broader strategy
to add payments to a range of devices consumers increasingly
use.
"A good characteristic of any CEO is to be a bit paranoid," said
Mr. Kelly on the call. "We are really laser focused on the future
and the fact that there are disruptive forces in the
marketplace."
Big shifts in markets abroad could impact Visa. In Europe,
regulators are looking to make payment transactions more secure and
to foster innovation that allows for fintech firms to become bigger
players. Visa, like several other U.S.-based card networks, has
been trying to make inroads in China. 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.
Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com and
Allison Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
October 26, 2017 02:49 ET (06:49 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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