Visa Profit Falls, But In Line

(RTTNews) - Card processor Visa Inc. (V), Wednesday reported a lower fourth-quarter profit, due mainly to the hefty tax benefit recorded last year. However, earnings for the quarter came in line with Wall Street estimates. Meanwhile, revenue grew on higher processing volume but fell short of expectations.

For 2014, Visa expects revenue to grow in the low double-digits, with possible foreign currency losses of two percentage points. The company continues to see adjusted earnings growth in the mid-to-high teens.

Visa has initiated a new $5 billion share repurchase program with authorization from its board.

Shares of the company dropped over 3 percent in after-hours trade on the New York Stock Exchange, following the announcement of results.

Visa and rival MasterCard Inc. (MA) facilitate electronic funds transfers and earn fees for the service. Despite soft economic conditions, Visa has managed to drive revenue as consumers prefer cards to make payments.

San Francisco, California-based Visa posted quarterly net income of $1.2 billion or $1.85 per Class A share, compared with $1.66 billion or $2.47 per share last year.

The prior-year quarter included a tax benefit of $627 million excluding which, earnings would have been $1.04 billion or $1.54 per share. On average, 31 analysts polled by Thomson Reuters expected earnings of $1.85 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter climbed 9 percent to $2.97 billion from $2.73 billion a year ago. Twenty-nine analysts had a consensus revenue estimate of $3.02 billion for the quarter.

"We continued investing in high growth regions of the world, in products and technology to drive our performance, while maintaining disciplined expense control," said CEO Charlie Scharf.

The strengthening of the U.S. dollar impacted revenue by about 1.5 percentage points of negative growth during the quarter, Visa said in a statement.

Service revenue - recognized based on payments volume in the prior quarter - rose 10 percent compared with a year ago. Data processing revenue climbed 12 percent and international transaction revenue grew 13 percent.

Visa's payment volume for the quarter rose 13 percent year-over-year to $1.1 trillion. Cross-border volume was up 11 percent.

During the quarter, Visa repurchased 7 million of its Class A shares for $1.3 billion. At September 2013, the company had $251 million for repurchase under the current program.

Visa stock closed Wednesday at $203.82, down $0.42 or 0.21%, on a volume of about 3 million shares. In after hours, the stock dropped $6.82 or 3.35%, trading at $197. In the last year, the share traded in the range of $137.40 - $205.25.