Visa: Outlook cautious on Ebola, other headwinds
Visa (NYSE:V), the world's largest credit and debit card company, reported quarterly earnings that topped Wall Street estimates on Wednesday, sending shares nearly 6 percent higher in after-hours trading.
Payments' volume growth, on a constant dollar basis, rose 11 percent, year-over-year, to $1.2 trillion during the quarter, while total processed transactions grew 9 percent, year-over-year, to about $17 billion.
Service revenue, which is generated from clients' transaction fees, rose to $1.5 billion, up from $1.39 billion in the year-earlier period. However, the company paid more to form client relationships. Its loss from client incentives widened to $768 million from $680 million a year ago.
The company reported fiscal-fourth quarter earnings of $2.18 per share, ex-items, on $3.23 billion in revenue, beating forecasts for earnings of $2.10 a share on $3.19 billion in revenue, according to a consensus estimate from Thomson Reuters.
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The company noted that its near-term outlook remained cautious, citing the modest pace of the economic recovery, Ebola and low currency volatility as possible headwinds.
Looking ahead, Visa said fiscal full-year 2015 revenue growth would be in the low double digits, which was slightly better than Wall Street's expectations.
On the other hand, the company expects fiscal full-year 2015 earnings to grow in the "mid-teens," which was in line with analysts' estimates.
Visa said its board approved a $5 billion stock repurchase program. and its cash pile shrunk to $1.97 billion from $2.19 billion a year ago.
Last week, the global payments provider said it would increase its quarterly dividend to 48 cents per share on Dec. 2 for eligible class A shareholders.
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Visa, along with other major credit card providers, recently teamed up with Apple to launch Apple Pay, a new mobile payments platform.
The Foster City, California-based firm has made big efforts to adopt technologies like chip cards, and digital account numbers or "tokens" in place of payment account data in attempt to enhance security.
"The adoption of chip technology has the potential to virtually eliminate counterfeit fraud when widely adopted, and will help consumers feel more confident about using their payment cards," the company said in a statement earlier this month.
In September, Visa said it was exploring options for its investment in Monitise Plc, a British mobile banking technology company, as it looks to reduce its dependence on external mobile development resources.
Correction: The company beat revenue forecasts of $3.19 billion.
