July 24, 2015
Visa beat estimates on both its top and bottom line during its fiscal third quarter, the credit card company said on Thursday. Shares of Visa Inc. surged 7% after the company said it is in talks with Visa Europe, a division Visa split off from ahead of the company’s 2008 IPO, for a deal to buy it back.
The company’s results were helped by an increase in consumer spending, with the total volume of transactions processed by Visa up 11% from a year ago to $1.3 trillion. Visa posted a net income of $1.7 billion or 69 cents per share during the quarter, up from $1.4 billion, or 54 cents a share a year before.
The company said in a Forbes article that the adjusted earnings figure is due to the re-evaluation of its put option with Visa Europe. The company is in discussion with Visa Europe and hopes to come to a decision by the end of October. Overall operating revenues were $3.5 billion, a rise of 12%. The inhibitor of growth was solid service, data processing and international transactions revenues.
We continue to deliver solid financial results and operating metrics without the help of an improving economic environment. Strong underlying fundamentals continue to offset the drag from geopolitical tension and the strengthening dollar on our business, CEO Charlie Scharf said in a statement to Forbes.
Visa does have a problem in the international markets now. It is faced with regional card networks like China’s UnionPay which has grown very aggressively and now has more issued cards than Visa. According to the latest figures released by China UnionPay (CUP), the total transaction volume via China’s UnionPay system—the only domestic bank card organization in China—amounted to RMB 11.80 trillion or $1.90 trillion in the first quarter of 2015.
Visa, the largest payment company worldwide, revealed that its Q1 transactions added up to $1.75 trillion. This marks the first time China’s UnionPay exceeds VISA in terms of combined transaction volume and becomes the largest bank card settlement organization.