Credit card major Visa Inc. (V), Tuesday reported a profit for the fourth quarter, as more customers shifted to electronic payments, even as the company managed to cut back its operating expenses. The company's quarterly earnings, on adjusted basis, exceeded the analysts' expectations, as did its quarterly revenues. Visa also revealed an authorization by its board for a $1 billion share repurchase program that is valid through September 2010. Looking ahead, Visa reaffirmed its financial outlook for fiscal 2010.
The San Francisco, California-based company posted GAAP net income of $514 million or $0.69 per class A share for the fourth quarter, compared to a loss of $356 million or $0.45 per share in the prior year quarter.
Excluding items, adjusted net income grew to $552 million or $0.74 per class A share from $448 million or $0.58 per class A share in the year-ago quarter. On average, 27 analysts polled by Thomson Reuters expected the company to report earnings of $0.72 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Fourth quarter net operating revenue increased 10% to $1.9 billion from $1.7 billion in the same quarter last year, driven primarily by strong contributions from data processing revenues as processed transactions grew 9%. Twenty-five analysts had a consensus revenue estimate of $1.78 billion for the fourth quarter.
Joseph Saunders, chairman and chief executive officer of Visa, said, "Visa delivered another quarter and year of solid financial results during this challenging economic environment. Our strong returns are a reflection of consumers' continuing shift to electronic payments, the success of efficiency initiatives and importantly, continued support from our financial institution partners."
Service revenues for the fourth quarter grew 3% to $808 million over the prior year. Service revenues are recognized based on payments volume in the prior quarter, while all other revenue categories are recognized based on current quarter activity.
Data processing revenues soared 33% to $727 million, while International transaction revenues, which are driven by cross-border payments volume, declined 1% to $507 million from a year earlier.
Other revenues, which include the Visa Europe licensing fee, were $163 million, up 2% over the prior year. Volume and support incentives, which are a contra revenue item, increased 9% to $326 million from the previous year quarter.
Payments volume, on a nominal basis, dropped by 2% to $687 billion. Total volume, on a nominal basis and inclusive of cash volume, was $1.1 trillion, a 3% decline over last year.
Total processed transactions, which represent transactions processed by VisaNet for the fourth quarter, increased 9% to 10.5 billion from the year-ago quarter.
Total cards carrying the Visa brands rose 5% worldwide to over 1.7 billion from the fourth quarter of 2008.
Total operating expenses for the fourth quarter fell sharply to $1.0 billion from $2.2 billion in the prior year quarter. On an adjusted basis, operating expenses rose 2% to $960 million from $943 million in the previous year quarter.
At September 30, 2009, the company had cash, cash equivalents, restricted cash, and investment securities of $6.6 billion.
Visa said that its board has authorized a $1 billion share repurchase plan. The authorization will be in place through September 30, 2010, and is subject to extension or expansion at the determination of Visa's board.
Last week, the company's board increased the quarterly dividend by 19% to $0.125 per class A share. The dividend is payable on December 1, to all holders of record of the company's class A, class B and class C common stock as of November 16.
During the quarter, Visa initiated a program to allow its class C stockholders to apply for an early termination of the transfer restrictions applicable to class C shares, for up to 30% of the class C shares held by each such stockholder as of July 1.
As of September 30, 89% of the potentially available shares requested were unlocked. The remaining class C shares continue to be subject to the general transfer restrictions that expire on March 25, 2011 under Visa's Certificate of Incorporation.
Also in the quarter, Visa U.S.A. Inc. entered into an agreement to modify its payment obligations under a settlement agreement with plaintiffs in a class action lawsuit challenging certain aspects of the payment card industry under U.S. federal antitrust law.
On October 2, the court in the class action lawsuit entered a final order approving the agreement. On October 5, the company made a prepayment of its remaining $800 million in payment obligations at a discounted amount of $682 million.
For the full-year 2009, Visa reported GAAP net income of $2.4 billion or $3.10 per class A share, compared to $804 million or $0.96 per class A share in the previous year.
On an adjusted basis, net income rose to $2.4 billion or $3.23 per class A share from $1.7 billion or $2.25 per class A share in the prior year. Excluding the impact from the VisaNet do Brasil sale, net income was $2.2 billion or $2.92 per class A share for fiscal 2009.
Annual net operating revenue grew 10% to $6.9 billion from $6.3 billion in the year-ago. The company noted that currency fluctuations negatively affected revenue growth by 3%.
Analysts estimated earnings of $2.90 per share on revenue of $6.80 billion for the year 2009.
Looking ahead, Visa continues to expect earnings per class A share growth for fiscal 2010 to be greater than 20%, and net revenue growth at the lower end of the 11% to 15% range. The Street currently estimates earnings of $3.44 per share on revenue of $7.51 billion for the year.
For fiscal 2011, the company anticipates earnings per class A share growth to be greater than 20%.
Among others in the industry, American Express Co. (AXP), reported a drop in third quarter profit impacted by lower consumer card spending and lower loan volumes, amid the global economic recession. American Express, nevertheless, said overall billings have stabilized during the last few months, with indications of spending by corporate card-members beginning to pick up.
Electronic payment services company Discover Financial Services (DFS) posted a sharp growth in third-quarter profit, bolstered by the Visa/MasterCard antitrust litigation settlement.
Another peer, MasterCard Inc. (MA) is slated to report financial results for the third quarter on November 3. Analysts estimate MasterCard to report earnings of $2.92 per share on revenue of $1.34 billion for the third quarter.
Visa closed Tuesday's regular trading session at $73.90, up $1.12 or 1.54%, on a volume of 10.03 million shares. In after-hours, the share further gained $1.93 or 2.61%.
The stock has been moving in a range of $41.78 - $76.99 for the past 52 weeks, with an average daily volume of about 5.28 million shares for the past three months.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.