Visa Inc. (V:US), the biggest bank-card network, reported a fiscal third-quarter profit that beat analysts’ estimates as worldwide spending on credit and debit cards climbed.
Net income (V:US) for the three months ended June 30 was $1.23 billion, or $1.88 a share, compared with a loss of $1.84 billion, or $2.74, a year earlier that included a litigation expense, the Foster City, California-based company said today in a statement. The average estimate (V:US) of 33 analysts surveyed by Bloomberg was for earnings of $1.80 a share. Profit excluding special items from the third quarter of 2012 climbed 16 percent.
Chief Executive Officer Charlie Scharf is seeking to bolster Visa’s business outside the U.S., where it gets more than half its revenue, as consumers worldwide continue to migrate from cash and checks to electronic payments. The company has returned more than $15 billion to shareholders since 2008.
“From a longer-term perspective, we continue to believe that Visa is the single best way” to harness returns amid the shift away from cash, Greg Smith, an analyst at Sterne Agee & Leach Inc., wrote in a July 21 report. “We expect the company to consistently generate at least mid-teens” earnings-per-share growth, he said.
Visa rose 2.3 percent to $191.01 at 4:39 p.m. in extended trading in New York after results were announced. The shares climbed 23 percent this year through the close of regular trading, outpacing the 9.3 percent advance for the 70-company Standard & Poor’s 500 Information Technology Index.
The company repurchased $981 million of its stock during the quarter at an average of $176.75 a share and may buy back an additional $1.5 billion through next July, according to the statement.
Third-quarter operating revenue climbed 17 percent to $3 billion, beating the $2.89 billion average estimate of analysts surveyed by Bloomberg. Revenue will increase about 13 percent a year, according to the statement. Earnings per share will increase by more than 20 percent annually, the company said, after an earlier forecast of “around” 20 percent.
Worldwide spending on Visa cards climbed 13 percent to $1.09 trillion, adjusted for currency fluctuations, according to the statement. Processed transactions rose 14 percent to 15 billion. Cross-border purchases, or spending by cardholders outside their home countries, advanced 11 percent.
In the U.S., debit-card purchases advanced 12 percent to $300 billion, and credit-card spending increased 10 percent to $270 billion, according to the statement.
Visa and No. 2 network MasterCard Inc. (MA:US) agreed last year to a $7.25 billion settlement over the fees charged to merchants when consumers pay with credit cards. Visa sued Wal-Mart Stores Inc. last month to stop the biggest U.S. retailer from filing a lawsuit that would prolong the eight-year legal battle the settlement seeks to end.
Scharf, 48, has pledged to be more flexible in responding to the demands of Visa’s business partners and in February the company reached agreement with JPMorgan Chase & Co., the biggest U.S. card issuer, to let the lender tailor payment solutions for merchants.
American Express Co., the New York-based card issuer that also runs the third-largest U.S. bank-card network, said July 18 that second-quarter profit rose 4.9 percent to $1.41 billion as customer purchases increased. Riverwoods, Illinois-based Discover Financial Services, the No. 4 network, said yesterday that quarterly net income climbed 15 percent to $602 million. MasterCard is set to report results July 31.
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