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Visa Profit Rises 26%; Authorizes $1.75 Bln Buyback


Visa Inc. (V), the world's largest payment card processing network, said Wednesday after the markets closed that its first quarter profit rose 26% from last year, helped by a broad-based revenue growth.

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

The company also said its Board of Directors has authorized a new $1.75 billion class A share repurchase program. The authorization will be in place through January 2014. The new authorization on top of remainder at December 31 brings outstanding share repurchase authorization to about $2.9 billion.

"Visa again delivered a strong quarter of revenue and earnings driven by success across our global franchise," said Charlie Scharf, who succeeded Joseph Saunders as Visa's Chief Executive Officer on November 1.

"We have been committed to using our capital wisely and that includes returning capital to stockholders through dividends and share repurchases. The board's decision to increase Visa's repurchase authorization continues that commitment, supported by confidence we have in our future," Scharf added.

Rival MasterCard Inc. (MA) last week reported fourth quarter profit that rose sharply from last year, when results included a hefty provision for litigation settlement. In addition, revenues for the latest quarter benefited from growth in volumes and processed transactions. The company's adjusted earnings per share topped analysts' expectations.

Visa shares are currently losing 1.59% in after hours trading after closing the day's regular trading session at $160.82, up $1.29. The shares trade in a 52-week range of $107.02 to $162.77.

Visa's first quarter service revenues, which are recognized based on payments volume in the prior quarter, increased 13% year-over-year to $1.3 billion.

Data processing revenues for the quarter climbed 17% to $1.1 billion. International transaction revenues, which are driven by cross border payments volume, grew 8% to $805 million.

Client incentives, which are a contra revenue item, were $553 million for the quarter, and represented 16% of gross revenues.

On a constant dollar basis, payments volume for the fourth quarter, on which fiscal first quarter service revenue is recognized, grew 6% over the prior year at $1.0 trillion.

Payments volume, on a constant dollar basis, for the first fiscal quarter rose 9% over the prior year to $1.1 trillion.

Visa said it processed 14.2 billion transactions during the first quarter, an increase of 4% from last year.

The company said it paid about $4.0 billion in December from the litigation escrow account into a settlement fund established pursuant to a definitive class settlement agreement. Additionally, in October, the company made a payment of $350 million to the individual plaintiffs' settlement fund.

During the first quarter, Visa repurchased about 9 million shares of class A common stock for $1.3 billion. In October, the company's board had authorized a $1.5 billion class A share repurchase program. The authorization is in place through October 2013.

For the first quarter ended December 31, 2012, the San Francisco, California-based company reported net income of $1.29 billion or $1.93 class A share, compared to $1.03 billion or $1.49 per class A share for the year-ago quarter.

The latest quarter results include a catch-up tax benefit effect of about $0.11 per share

On average, 30 analysts polled by Thomson Reuters expected the company to earn $1.79 per class A share for the first quarter. Analysts' estimates typically exclude special items.

Total operating revenues for the first quarter rose 12% to $2.85 billion from $2.55 billion in the same quarter last year. Thirty-nine analysts had a consensus revenue estimate of $2.82 billion for the first quarter.

Visa affirmed its fiscal 2013 financial outlook, which calls for net revenue growth in the low double digits and class A common stock earnings per share growth in high teens.

by RTTNews Staff Writer

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