Visa Sees Momentum Extending to 2018 as Profit Tops Forecast

Updated on
  • Net income jumps more than expected in fiscal fourth-quarter
  • Company sees ‘high-end of mid-teen’ growth in coming year

Visa Inc.’s profit growth just keeps rolling.

The company topped its own forecast for annual revenue and profit growth in the fiscal year ended Sept. 30 as volume on its credit and debit cards jumped 10 percent in both the U.S. and Europe. Visa also said it expects adjusted earnings per share to increase by a percentage in the “high end of mid-teens” for 2018, a better forecast than some analysts expected.

San Francisco-based Visa has been investing in digital payment technologies and establishing more relationships with retailers to spur the global shift away from cash and checks to electronic payments. The company completed its $20 billion purchase of Visa Europe last year after the two firms spent eight years as separate entities. Revenue from Europe is ahead of projections, while expenses have been less than predicted, Chief Financial Officer Vasant Prabhu said Wednesday on a call with analysts.

“We are bullish on Europe and think there’s a good deal of upside,” Chief Executive Officer Al Kelly, who took over the top job last December, said on the call. “We see tremendous diversity across the markets, with countries that have large, cash-based economies balanced by others that have moved to near-cashless economies.”

Adjusted earnings per share climbed 23 percent for the year, while revenue jumped 22 percent, the company said Wednesday in a statement. In July, the company raised its forecast for full-year revenue and adjusted earnings-per-share growth to about 20 percent each.

Visa shares rose 1.3 percent to $109.77 at 9:58 a.m. in New York. The stock has gained 41 percent this year, outpacing the 14 percent advance of the S&P 500 Index.

Here’s a summary of key numbers from fiscal fourth-quarter results:

  • Net income rose 11 percent to $2.14 billion, or 90 cents a share, from $1.93 billion, or 79 cents, a year earlier, according to the statement. The average estimate of 35 analysts surveyed by Bloomberg was for adjusted per-share profit of 85 cents.
  • Revenue climbed to $4.86 billion on higher volume in every region, exceeding analysts’ $4.63 billion estimate.
  • Global credit- and debit-card spending, including Visa Europe and adjusted for currency fluctuations, increased 10 percent from a year earlier. That growth is expected to moderate in fiscal year 2018, Prabhu said on the call.
  • Operating expenses climbed 0.4 percent to $1.64 billion from a year earlier. The company said it expects expense growth to be in the “mid-single digits” next year.
  • Cross-border volume, a measure of customer spending abroad, rose 10 percent.
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