Visa Reports Better-Than-Expected Quarterly Earnings

Visa

Visa Inc says earnings in its fiscal fourth quarter jumped about 28 percent, higher than analysts’ expectations and helped by results from newly-acquired sister company, Visa Europe, and increased payments volume on the network.

The global payments technology company revealed on Monday that its total operating revenue for the quarter ended Sept. 30 stood at $4.26 billion, representing a rise of 19.3 percent from a year ago. The figure was higher than the $4.23 billion predicted by some analysts.

Total payments volume during the fiscal fourth quarter jumped to $1.86 trillion, up about 47 percent from a year earlier, on a constant dollar basis. Roughly 41 percent of the total payments volume during the period was accounted for by the U.S. market.

The report comes a week after Chief Executive Officer Charles Scharf announced that he would step down from his position on Dec. 1. He said he could no longer spend sufficient time in San Francisco to do his job more effectively.

Before his departure, however, Scharf moved to consolidate Visa’s position as the largest payment processor in the world with the acquisition of sister company Visa Europe in a $23 billion deal back in June. That move contributed to the fourth quarter results exceeding expectations of analysts.

Visa said Europe accounted for around 25 percent of the total payments volume during the fiscal fourth quarter.

“We have begun to see the benefits from our acquisition of Visa Europe and strong cost discipline helped our results,” Scharf said in a statement.

The payment company revealed that cross-border volumes, including Visa Europe, soared 149 percent on a constant dollar basis.

Visa earned $1.9 billion or 79 cents per share during the quarter, up from $1.5 billion or 62 cents a share a year ago. Profit per share, when adjusted for one-time items, was 78 cents.

Analysts polled by Thomson Reuters had provided an average estimate of 73 cents a share in adjusted earnings.

Adjusted earnings for Class A shares are forecast to rise by a percentage in the mid-teens on nominal dollar basis during the current fiscal year, as reported by Reuters. Net revenue is expected to expand by between 16 and 18 percent, also on a nominal dollar basis.

Chief Financial Officer Vasant Prabhu stated that uncertainty surrounding Brexit and the economy in Europe is likely to impact on payment volumes next year.

Visa’s operating expenses was $1.64 billion during the quarter, up 27 percent. The increase was attributed principally to the inclusion of Visa Europe in the results.

The leading payment processor said it took a $110 million pretax charge during the quarter to take care of severance costs, including proposed cuts in Europe.

Visa shares closed 1 percent up during regular session on Monday, although they oddly declined in after-hours trading. The shares have climbed roughly 7.2 percent in 2016, compared to a rise of around 6 percent for closest-rival MasterCard Inc.

Scharf, who said his retirement was influenced by desire to spend more time with his family, is to be replaced by Visa long-time board member Alfred Kelly as the CEO.

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