Earnings

Visa Surges On Visa Europe, Strong Cardholder Spend

On his first earnings call with investors and analysts, Visa CEO Al Kelly had good news to report. Visa beat Wall Street expectations for both quarterly profit and revenue, and processing volumes were strong both domestically and cross-border. Visa cardholders, it seems, are using their cards everywhere and anywhere they want to shop — in both developed and developing markets.

“The global opportunity to digitize cash and check is enormous,” Kelly said. “We have a vibrant core business in developed regions with even more growth opportunities in the international and emerging markets with low penetration rates. Governments and emerging middle classes are leading the way to digitize more payments in developing countries, while e-commerce is displacing cash and check in developed countries. Through our focus on technological innovation and partnership development, Visa is well positioned for sustained growth going forward.”

Wall Street seemed to agree. Shares were up 3.4 percent in extended trading on Thursday.

By The Numbers

Visa’s net income rose 6.6 percent to $2.07 billion, or 86 cents per Class A share, in the latest quarter. That decisively beat analyst expectations of 78 cents per share, according to Thomson Reuters. Operating revenue was also an expectations beater, logging in at $4.46 billion versus the $4.29 billion analysts predicted.

Buoyed by the acquisition of Visa Europe, total payments volume was up 39 percent to $1.8 trillion on a constant dollar basis in the first quarter, a big jump from the 11 percent growth during the same quarter in 2015. The United States represents almost 45 percent of Visa’s total payments volume, where transaction volume was up 12 percent; Europe accounted for nearly 20 percent.

Total processed transactions rose 44 percent to 27.3 billion, and cross-border volumes increased an eye-popping 140 percent on a constant dollar basis.

Digital and China

Kelly emphasized the strength of Visa’s global network of 16,000 financial institutions and 44 million merchants as the foundation upon which the world’s largest payments network giant will capitalize on the digital opportunities that are shaping the direction of commerce worldwide.

“E-commerce enabled by mobile and other form factors is a significant opportunity, and we are definitely investing behind it. As payments move from the physical to digital world, we’re leading the way in developing solutions for our clients, our partners and consumers.”

One such solution is Visa Checkout. According Kelly, the service has 18 million consumer accounts in 23 countries — and over 1,500 financial institutional partners participating around the world.  More than 300,000 merchants now accept Visa Checkout, Kelly noted, which he said accounts for $173 billion in addressable volume.

“As a market leader in payments technology, we’re enabling new forms of digital commerce and supporting the new businesses in mobile payments, the Internet of Things, data security, and the sharing economy.”

Visa also noted its ongoing commitment to entering China, acknowledging the complexities that represents. Kelly noted that Visa is still awaiting additional clarification from the government before submitting their application for a license to do business in China, but acknowledges that it’s Visa’s intent to move “very quickly” once additional details are provided.

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