Visa Inc. (NYSE: V), the world’s largest electronic payments network, is scheduled to release its fiscal first-quarter earnings after the closing bell on Thursday, May 5, 2011. Analysts, on average, expect the company to report earnings of $1.20 per share on revenue of $2.23 billion. In the year ago quarter, the company reported earnings of 96 cents per share on revenue of $1.96 billion.
Visa Inc. operates retail electronic payments network worldwide. It facilitates commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses, and government entities. The company owns and operates VisaNet, a global processing platform that provides transaction processing services, primarily authorization, clearing, and settlement, as well as related value-added services.
In the preceding first quarter, the San Francisco, California-based company's net income was $884 million or $1.23 per class A share for the first quarter, up from $763 million or $1.02 per class A share in the prior year quarter. Total operating revenues grew 14 percent to $2.24 billion from $1.96 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of $1.20 per share on revenue of $2.22 billion.
At its last earnings call in February, the company said that it continues to expect earnings per class A share growth to be greater than 20 percent, while it anticipates net revenue growth to be in the 11 percent - 15 percent range.
The company continues to benefit from strong secular demand growth, increased payment volumes, meaningful international exposure, high barriers to entry, excellent pricing power, impressive operating leverage, and consistent growth in processed transactions.
Meanwhile, the company has continued to expand its e-commerce and mobile payments businesses. In February, the company agreed to acquire PlaySpan Inc., for about $190 million in cash, plus additional consideration for performance milestones. The acquisition is expected to be completed in Visa's fiscal second quarter 2011. The transaction is anticipated to be slightly dilutive to Visa's earnings per share in its fiscal year 2011 ending September 30, 2011. PlaySpan Inc., is a privately-held company whose payments platform handles transactions for digital goods in online games, digital media and social networks around the world.
However, uncertainty stemming from financial overhaul, which includes curbs on debit-card transaction fees, has taken some shine off Visa's shares. Last month, the Federal Reserve on Thursday proposed capping fees banks can charge merchants for debit-card transactions at 12 cents. While that directly affects bank revenues from debit cards, the banks could try to get Visa and MasterCard to lower their fees to use their networks in order to offset the revenue loss. Visa has already estimated that about 16% or less of its revenues will be affected from the adverse impact of these regulations. According to Visa, the debit caps, set to take effect in July, won’t affect Visa’s results until the fiscal fourth quarter of 2011.
Full Disclosure: None.
