Global Biz

Visa posts 24% jump in 2Q profit, tops views

(Agencies)
Updated: 2011-05-06 10:19

NEW YORK - Visa Inc. on Thursday said that its fiscal second-quarter profit leaped 24 percent, as consumers used their credit and debit cards more often in the US and abroad.

The San Francisco-based payment processing company reported net income of $881 million, or $1.23 per share, for the three months ended March 31. That compared with earnings of $713 million, or 96 cents per share, for the year-earlier period.

Revenue rose 15 percent to $2.25 billion, from $1.96 billion a year ago.

The results exceeded Wall Street expectations. Analysts, on average, had forecast profit of $1.20 per share, on $2.23 billion in revenue, according to data provided by FactSet.

The world's largest payments processor earns its money by operating the network through which electronic payments are made. It does not issue credit or debit cards or lend money to card users.

Analyst Thomas McCrohan of Janney Capital Markets said the results contained few surprises. Revenue was a little lighter than he expected, but not light enough to draw concern.

Overall, it is clear that consumers are returning to using their cards, he said.

Payments volume growth was 15 percent in the quarter ended Dec 31. Visa recognizes its largest revenue line, service revenue, based on the prior quarter's payments volume. The $1.09 billion in service revenue therefore reflected holiday spending, which was stronger than expected.

All other revenue lines are recognized in the same quarter, including international transactions. For the three months ended March 31, payments volume growth was 13 percent. Cross border volume growth was also 13 percent

Visa processed more than 12 billion transactions in the quarter, up 13 percent from last year.

The company reaffirmed its outlook for annual net revenue growth between 11 and 15 percent, implying guidance ranging between $8.95 billion and $9.11 billion. Wall Street expects $9.13 billion in revenue, with estimates ranging from $8.89 billion to $9.42 billion.

Visa also said its board authorized a new $1 billion share repurchase program. Its prior program had a remaining authorization of $64 million. During the quarter ended March 31, Visa repurchased about 8.7 million shares, at an average price of $72.58 per share, for a total cost of $630.

Despite the better-than-expected results, Visa shares slipped in after-hours trading. The stock gave up $1.35 to $77.35, after closing the regular session down $1.07 at $78.70.

The company's results typically exceed expectations, and traders may have been looking for a wider gap than Visa delivered.