Visa Swings To Q3 Profit, Tops View - Update

(RTTNews) - Visa Inc. (V), the world's largest payment card processor, Wednesday reported a profit for the third quarter, as card spending by consumers increased. The year-ago quarter loss was mainly driven by a hefty litigation settlement. Both earnings and revenues for the quarter came in ahead of Wall Street expectations.

Visa said its operating revenues for the third quarter grew to $3.00 billion from $2.57 billion last year. Analysts polled by Thomson Reuters estimated revenues of $2.89 billion for the quarter.

The revenue increase was attributed to strong growth in service revenues, data processing revenues and international transaction revenues.

Visa's service revenues, which are recognized based on payments volume in the prior quarter, climbed 7 percent to $1.3 billion from a year ago. Data processing revenues rose 15 percent to $1.2 billion, while international transaction revenues grew 14 percent to $854 million from last year.

Payments volume for the quarter spiked 13 percent to $1.1 trillion. Visa processed 15.0 billion transactions during the quarter, a 14 percent increase over the prior year.

Visa, like its peer MasterCard, continue to reap profit as more consumers now prefer electronic payments instead of cash and checks, notwithstanding the uncertain economic conditions that has slowed growth.

San Francisco, California-based Visa's third-quarter profit was $1.23 billion or $1.89 per class A share, compared to a loss of $1.84 billion or $2.74 per class A share last year. On average, 32 analysts expected earnings of $1.80 per share for the quarter. Analysts' estimates typically exclude special items.

Last year, the company recorded a $4.1 billion provision representing its financial portion in the settlement of the merchant class litigation. Visa and rival MasterCard Inc. (MA) and several other US banks agreed to settle the litigation over the "swipe" fees that merchants pay to accept credit and debit cards.

Excluding special items, earnings for the third quarter last year were $1.06 billion or $1.56 per share.

Visa now expect adjusted earnings growth in the low twenties and annual net revenue growth of around 13 percent. Earlier, the company expected earnings growth of about 20 percent and revenue growth in low double digits. Analysts currently estimate revenue growth of 12.60 percent for the year.

For the fiscal year 2014, Visa affirmed its financial outlook for annual revenue growth of low double digits and adjusted earnings of mid-to-high teens.

Visa spent $981 million to repurchase 6 million class A shares during the quarter, with a new authorized $1.5 billion repurchase program.

V closed Wednesday's regular trade at $186.75, down $1.83 or 0.97%, on a volume of 3.50 million shares on the NYSE. The stock, however, gained $4.25 or 2.28% in after hours.