Visa Inc.: Profits soar 51 percent as card use rises

Visa Inc. processed 16 percent more transactions in the past quarter. Use of Visa cards in October also looks strong.

Mark Lennihan/AP
Signs for Visa and Mastercard credit cards are shown on a store window Oct. 27 in New York. Visa Inc. reported that its fourth quarter profits rose 51 percent, beating analysts expectations.

Visa Inc. on Wednesday said that its fiscal fourth-quarter profit rose 51 percent, as consumers carrying cards with its brand used them more, and it collected more fees for processing transactions.

For the three months ended Sept. 30, the San Francisco-based payments processing network posted net income of $774 million, or $1.06 per share, compared with $514 million, or 69 cents per share, in the year-ago quarter.

Adjusted for a $79 million charge related to the revaluation of an option held by Visa Europe to sell its business back to Visa Inc., adjusted earnings came to 95 cents per share.

Analysts surveyed by Thomson Reuters, on average, were expecting profit of 94 cents per share. Analyst estimates typically do not include one-time charges or gains.

Visa said revenue rose 13 percent to $2.12 billion, from $1.88 billion last year.

Analysts projected revenue of $2.09 billion.

"We count on Visa to deliver, and they delivered solid results this quarter," said Edward Jones analyst Andy Miedler.

Total processed transactions rose 16 percent to 12.1 billion in the quarter. On a dollar basis, payments volume rose 14 percent to $802 billion. Cross-border volume grew 16 percent.

In the U.S., growth in debit card use continued to outpace credit use, but credit did have its second straight quarter of growth after stumbling last year.

Visa's Chief Financial Officer Bryon H. Pollitt, during a conference call to discuss the results, said card use and spending so far in October continued to be positive. UBS analyst Jason Kupferberg said that was encouraging news.

Service revenue, the fees merchants pay for transaction processing, rose 13 percent to $912 million. Data processing revenue rose 15 percent to $840 million. International transaction revenue spiked 22 percent to $619 million.

For the full fiscal year, Visa posted net income of $2.97 billion, or $4.03 per share, up from $2.35 billion, or $3.10 per share, in the prior year. Revenue rose to $8.07 billion, from $6.91 billion last year.

For its fiscal 2011, Visa said it still expects better-than-20 percent earnings per share growth, implying earnings of at least $4.84 per share. Wall Street was expecting, on average, $4.73 per share, with estimates ranging from $4.52 to $5.

Visa forecast revenue growth between 11 and 15 percent for the new fiscal year, implying guidance ranging between $8.95 billion and $9.11 billion. Analysts project $8.03 billion, with estimates ranging from $7.89 billion to $8.12 billion.

Executives speaking on the conference call declined to offer guidance for more than a year, in part because of the pending federal rules related to limits on debit card transaction fees paid by merchants.

In aftermarket electronic trading, Visa shares slipped $2.03, or 2.5 percent, to $77.89. The stock closed Wednesday's regular session at $79.92.

Mayank Tandon, an analyst with Signal Hill Capital Group, said the stock dip reflected slight disappointment with both results and guidance. "Expectations were a little high, waiting for a stronger beat," he said. He added that Visa tends to offer conservative guidance.

The company said its board approved a new $1 billion share-buyback plan.

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