Visa Posts Record Profit on Higher Spending -- 2nd Update
January 30 2020 - 7:18PM
Dow Jones News
By Maria Armental
Visa Inc. reported record quarterly profit and processed more
than $3 trillion in transactions, a record for the quarter, driving
a 10% revenue growth.
Still, revenue and net income fell slightly short of Wall Street
projections, according to FactSet, even as per-share profit matched
expectations.
Shares, which have been trading near record levels, closed
Thursday at $208.21 and fell 3% to $201.61 in after-hours
trading.
Overall, Visa's first-quarter profit rose 10% to $3.27 billion,
or $1.46 a Class A share, the company said Thursday. Net revenue
rose 10% to $6.05 billion.
Analysts expected $1.46 a share on $6.08 billion.
Higher spending has helped credit-card companies post record
results. Mastercard Inc. and American Express Co. this month also
reported quarterly results that beat analysts' projections, though
Discover Financial Services' revenue results for the most recent
quarter fell slightly shy of targets.
The company's board approved an additional $9.5 billion to buy
back stock, adding to the roughly $1.7 billion left as of Dec. 31
from a previous authorization, Visa said.
Payments volume, adjusted for foreign-currency fluctuations,
rose 8%. Meanwhile, volume from cross-border transactions, which
typically carry larger fees, rose 9%.
The San Francisco-based company paid $1.75 billion during the
quarter in client incentives, or long-term contracts with
merchants, clients and other partners to expand its network and
payment volume.
This year Visa projects incentives to eat away about 22.5% to
23.5% of gross revenue.
Visa is the largest U.S. card network, and its clients have
largely included banks that issue credit and debit cards. This
month, it made a big bet on digital payments with a roughly $5.3
billion deal to buy Plaid Inc., which connects apps like
mobile-payment services Venmo and robo adviser Betterment to users'
bank accounts.
"We see it as a natural extension of our network of networks,"
Chief Executive Al Kelly said Tuesday at the annual shareholders'
meeting.
The company still expects per-share profit for the year to
increase by a midteen percentage and revenue to increase by a low
double-digit percentage. The Plaid acquisition isn't factored into
the guidance, the company said.
Company officials said it was too early to estimate the impact
from a deadly virus outbreak in China. The World Health
Organization on Thursday declared the outbreak a public health
emergency of international concern, which recognizes that
international public-health authorities consider the respiratory
virus a significant threat beyond China and seeks to gain political
and financial support to stop it.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
January 30, 2020 19:03 ET (00:03 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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