Visa Profit Rises 9% On Higher Card Spending

(RTTNews) - Visa Inc. (V), the world's largest payment card processing network, said Thursday that its first quarter profit rose 9% from last year amid strong growth in card spending.

The company's quarterly earnings per share also came in above Wall Street expectations as did its quarterly revenue.

"Visa delivered a strong fiscal first quarter, posting solid revenue, net income and earnings growth. We continue to focus on embracing new partners and new technology which will make our network the one of choice," said Visa CEO Charlie Scharf.

Visa also affirmed its fiscal 2014 financial outlook, which calls for net revenue growth in low double digits on a constant dollar basis and class A common stock earnings per share growth in mid to high teens.

Visa shares are currently trading at $222.50, up $5.38 or 2.48%. The shares trade in a 52-week range of $154.14 to $235.50.

Visa and rival MasterCard Inc. (MA) facilitate electronic funds transfers and earn fees for the service. Despite soft economic conditions, Visa and MasterCard have managed to drive revenue as consumers prefer cards to make payments.

Visa's first quarter service revenues, which are recognized based on payments volume in the prior quarter, increased 9% year-over-year to $1.4 billion.

Data processing revenues for the quarter climbed 13% to $1.3 billion. International transaction revenues, which are driven by cross border payments volume, grew 11% to $891 million.

Client incentives, which are a contra revenue item, were $599 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, increased 13% over the prior year to $1.1 trillion.

Payments volume, on a constant dollar basis, for the first fiscal quarter rose 11% over the prior year to $1.2 trillion.

Visa said it processed 16.0 billion transactions during the first quarter, an increase of 13% from last year.

During the first quarter, the company repurchased 5.5 million shares of its class A common stock for $1.1 billion. At December 31, the company had $4.2 billion of authorized funds remaining for share repurchase under the current program.

For its fiscal first quarter ended December 31, 2013, the San Francisco, California-based company reported net income of $1.41 billion or $2.20 per Class A share, compared to $1.29 billion or $1.93 per Class A share for the year-ago quarter.

On average, 30 analysts polled by Thomson Reuters expected the company to earn $2.16 per share for the first quarter.

Total operating revenue for the first quarter rose 11% to $3.16 billion from $2.85 billion a year ago, driven by strong growth in service revenues, data processing revenues and international transaction revenues. Twenty-eight analysts had a consensus revenue estimate of $3.13 billion for the first quarter.

The strengthening of the U.S. dollar impacted net operating revenues by 2 percentage points of negative growth during the quarter, Visa said in a statement.