V Visa Inc

By AnnaMaria Andriotis 

A rise in card spending from increasingly confident consumers helped Visa Inc. beat revenue expectations for the first quarter of its fiscal year.

Visa's revenue for the quarter ended Dec. 31 rose 9% from the year before to $4.86 billion, just above the $4.85 billion analysts polled by Thomson Reuters expected.

Visa's profit rose to $2.52 billion, or $1.07 a share, from $2.07 billion, or 86 cents a share, the year before. But excluding two special items related to the impact of the new U.S. tax law, profit totaled $2.54 billion or $1.08 a share. Analysts expected adjusted earnings of 99 cents a share.

The company, however, updated its outlook for adjusted operating expense growth to the high end of mid-single digits, which is up from mid-single digits. It reaffirmed its outlook for annual net revenue growth of high single digits on a nominal dollar basis. Visa shares fell 1.8% in after-hours trading.

Card networks, including Visa and Mastercard Inc., which also reported earnings on Thursday, are posting large revenue increases as economies in many markets strengthen, particularly in the U.S. They are also reaping the benefits of increased credit-card usage among consumers because more transactions run over their networks.

Visa, the largest U.S. card network by many measures, including cards in circulation and number of transactions, processed a total of 30.5 billion transactions, up 12% from a year prior. The company reported a 10% increase on a constant-dollar basis in debit and credit payments volume that was processed on its network in the quarter from a year prior, totaling $2.0 trillion.

The company is planning to invest expected windfalls from the tax overhaul in several ways. Its board of directors approved a new $7.5 billion share-repurchase program and increased Visa's quarterly cash dividend to $0.21 a share. Separately, Visa recently said it is improving 401(k) benefits for its U.S.-based employees by increasing its matching contributions beginning in February. The company, which contributes $2 for every $1 an employee contributes, up to 3% of base pay, is increasing that to 5% of base pay.

Alfred Kelly, Visa's CEO, said in the company's earnings release that Visa is also "evaluating ways to further invest in our business, our people and our communities to digitize payments and contribute to overall economic growth," as a result of the benefits from the tax law.

Operating expenses at the company totaled $1.5 billion for the quarter, up 13% from a year earlier, due in large part to higher personnel costs. Mr. Kelly on the earnings call also said the company is "making significant investments" in strategic priorities, which contributed to higher expense levels. The company recently began testing a biometrics card in the U.S. that involves fingerprint identification. Cardholders place their finger on the card while they are at the payment terminal to authorize the payment.

The large networks are competing for lucrative co-brand partnerships, deals that are supposed to increase transactions on their network. Visa is the network for the new Starbucks credit card that the coffee giant and issuer JPMorgan Chase & Co. announced on Thursday. Visa also recently became the network for the Uber credit card issued by Barclaycard. Mastercard on Thursday said it won the Cabela's credit-card business, which will be flipping from Visa, following other recently announced conversions.

Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com

(END) Dow Jones Newswires

February 01, 2018 19:58 ET (00:58 GMT)

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