Visa Revenue Misses Wall Street Estimates as Profit Rises

Visa Inc., the world’s biggest bank-card network, reported an increase in fiscal second-quarter profit as a gain in revenue missed analyst estimates.

Net income for the three months ended March 31 rose 26 percent to $1.6 billion, or $2.52 a share, from $1.27 billion, or $1.92, a year earlier, Foster City, California-based Visa said yesterday in a statement. Adjusted earnings per share, which exclude a tax gain, were $2.20, two cents better than the average estimate of 31 analysts surveyed by Bloomberg. Revenue climbed to $3.16 billion, missing the $3.18 billion estimate.

Consumers are spending more on Visa’s network amid a global shift from cash to electronic forms of payment. A strengthening U.S. dollar will continue to weigh on Visa’s earnings growth in the next quarter, according to Chief Executive Officer Charlie Scharf.

“Our underlying business drivers remained strong,” Scharf, 49, said in the statement. “As expected, softer net revenue growth was impacted by a strengthening U.S. dollar and difficult year-over-year comparisons due to non-recurring items. We expect this impact to be slightly more pronounced next quarter before rebounding in our fiscal fourth quarter.”

Visa fell 3.6 percent to $201.89 at 6:30 p.m. in New York. It rose 0.3 percent to $209.40 at the close of regular trading. The shares have declined 6 percent this year, the third-worst performance in the Dow Jones Industrial Average.

Revenue Improves

Net operating revenue increased 7 percent to $3.2 billion as service, data processing and international-transaction results improved, Visa said. Payments volume increased 12 percent and cross-border volume growth was 8 percent compared to the prior year.

Operating expenses increased 2 percent to $1.1 billion as the company spent more money on promotions surrounding the Winter Olympics in Sochi, Russia and the World Cup soccer tournament in Brazil.

Visa said it expects net revenue to rise 10 percent to 11 percent in the current fiscal year and annual operating margin to be in the low- to mid-60s, according to a slide presentation.

Visa and MasterCard Inc. stopped processing cards for OAO Bank Rossiya last month as U.S. sanctions were imposed in the wake of the Crimean takeover. Cross-border volume has declined, resulting in “several pennies of EPS impact” in the fiscal year, Chief Financial Officer Byron Pollitt said on a conference call.

Visa ‘Caught’

“We’re caught between the politics of the United States and the politics of Russia,” Scharf said on the call. “We have 100 million cards there and it’s not in anyone’s best interest, inclusive of the Russians, to make those cards not available to their own citizens.”

Russian President Vladimir Putin said that Visa and MasterCard Inc. will lose market share as a result of the sanctions.

American Express Co., the third-largest U.S. payments network, said last week that first-quarter net income increased 12 percent from a year earlier to $1.43 billion. Profit at No. 4 Discover Financial Services slid 6.2 percent to $631 million, the Riverwoods, Illinois-based company said April 22.

MasterCard, the second-biggest U.S. network, is scheduled to report results May 1.


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