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Visa Profit Jumps 47%

Visa Inc. (V: Quote), the world's largest payment card processing network, said Wednesday after the markets closed its second quarter profit jumped 47% from last year, as it continues to benefit from the e-cash trend spreading worldwide.

The company's quarterly earnings per share, excluding items, also came in above analysts' expectations as did its quarterly revenue.

"Our strong financial performance this quarter was fueled by continued growth of U.S. credit products, strong cross border spending and expansion of Visa's core business in international markets," said Joseph Saunders, Visa Chairman and Chief Executive Officer.

Visa shares are currently losing 3.22% in after hours trading after closing the day's regular trading session at $122.19, down 90 cents. The shares trade in a 52-week range of $73.11 to $125.35.

Visa's second quarter service revenues, which are recognized based on payments volume in the prior quarter, increased 13% year-over-year to $1.2 billion.

Data processing revenues for the second quarter rose 12% to $922 million. International transaction revenues, which are driven by cross border payments volume, grew 17% to $733 million.

Client incentives, which are a contra revenue item, were $497 million for the quarter, and represents 16% of gross revenues.

On a constant dollar basis, payments volume for the first quarter, on which fiscal second quarter service revenue is recognized, grew 11% over the prior year at $993 billion.

Payments volume, on a constant dollar basis, for the second quarter rose 11% over the prior year to $956 billion.

Visa said it processed 13 billion transactions during the second quarter, an increase of 8% from last year.

For the second quarter ended March 31, 2012, the San Francisco, California-based company reported net income of $1.29 billion or $1.91 per class A share, compared to $881 million or $1.23 per class A share for the year-ago quarter.

Excluding a one-time non-cash benefit related to the remeasurement of existing net deferred tax liabilities, adjusted net income for the latest quarter was $1.08 billion or $1.60 per class A share.

On average, 32 analysts polled by Thomson Reuters expected the company to earn $1.51 per class A share for the second quarter. Analysts' estimates typically exclude special items.

Total operating revenues for the second quarter rose 15% to $2.58 billion from $2.25 billion in the same quarter last year, driven by strong contributions across all revenue categories. Twenty-nine analysts had a consensus revenue estimate of $2.48 billion for the second quarter.

Looking forward, Visa now expects annual adjusted class A common stock earnings per share growth to be in high teens to low twenties, compared to its prior forecast of high teens growth.

The company affirmed its outlook of annual net revenue growth in the low double digits and client incentives as a percent of gross revenues of 17% to 18%.

Earlier Wednesday, rival MasterCard Inc. (MA) reported a 21% increase in first quarter profit, as strong growth in volumes and processed transactions boosted its revenues. Both quarterly earnings per share and revenue topped analysts' estimates.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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