Why Visa Won Big on Q1 Earnings

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Visa Inc. (NYSE; V) released fiscal first-quarter earnings report after markets closed on Thursday. The company reported $0.86 in earnings per share (EPS) on $4.5 billion in revenue. The same period from last year had $0.69 in EPS and $3.56 billion in revenue. Consensus estimates from Thomson Reuters were calling for $0.78 in EPS and $4.29 billion in revenue.

For the fiscal first quarter, payments volume growth, on a constant dollar basis, was 39% over the prior year at $1.8 trillion. At the same time, cross-border volume growth, on a constant dollar basis, was 140%.

Total processed transactions were 27.3 billion, a 44% increase year over year.

The credit card giant detailed its business segments as:

  • Service revenues were $1.9 billion, an increase of 17% year over year.
  • Data processing revenues rose 28% over the prior year to $1.9 billion.
  • International transaction revenues grew 44% over the prior year to $1.5 billion.
  • Other revenues were $203 million, an increase of 2% over the prior year.

In terms of the outlook for 2017, the company expects to see annual net revenue growth in the range of 16% to 18% on a nominal dollar basis. Visa also expects to see adjusted EPS grow in the mid-teens on a nominal dollar basis. Consensus estimates are calling for $3.85 in EPS and $19.59 billion in revenue for the coming year.

On the books, cash, cash equivalents, and available-for-sale investment securities totaled $13.2 billion at the end of the quarter.

Alfred F. Kelly, Jr., CEO of Visa, commented:

Visa’s fiscal 2017 is off to a terrific start with a strong first quarter of revenue and earnings growth driven by accelerating growth in payments volume, cross-border commerce and processed transactions in virtually all regions around the world. As we look ahead, we continue to see good momentum in the business driven by domestic and cross-border volumes, increasing consumer participation in electronic payments in developing markets, and the further acceleration of e-commerce in developed markets. We remain focused on the integration of Europe which is proceeding well.

Shares of Visa closed Thursday at $82.30, with a consensus analyst price target of $95.45 and a 52-week trading range of $66.12 to $84.27. Following the release of the earnings report, the stock was up 2.4% at $84.25 in the after-hours trading session.