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Visa beats profit estimates, lifts earnings forecast
[CALIFORNIA] Visa Inc, the world's largest payments network operator, on Thursday reported a better-than-expected quarterly profit and raised its annual earnings forecast, as more people across the United States and Europe used its payments network.
Visa, which generates revenue by facilitating credit- and debit-card transactions, has benefited from increased consumer spending in the United States as well as results from Visa Europe, which it bought last June for about US$23 billion.
Visa's US payments volume rose 12.1 per cent on a constant dollar basis to US$840 billion in the third quarter ended June 30.
More than half its total volume of transactions comes from the United States.
Visa Europe generated US$371 billion in payments volume.
Results from the Europe unit are not part of Visa's prior-year quarter.
San Francisco-based Visa also raised its forecast for full-year earnings and revenue. The company said it now expects annual adjusted earnings per share to grow about 20 per cent, up from an earlier expectation of growth in the mid-teen percentage digits.
Visa forecast net revenue to rise about 20 per cent in the year ending September 30, having earlier expected a 16 to 18 per cent increase.
The company's forecast was boosted by strong growth in cross border volumes, Chief Financial Officer Vasant Prabhu said on a call with analysts.
Cross-border volumes - the value of transactions made outside of the United States - climbed 11 percent in the third quarter when adjusted to include Visa Europe's results in the year-ago quarter.
Prabhu said Visa benefited from a "sharp increase" in cross-border commerce into the United Kingdom due to a weaker pound following Britain's vote to leave the European Union.
Net income rose to US$2.06 billion, or 86 cents per Class A share in the quarter, from US$412 million, or 17 cents per Class A share.
Analysts on an average had expected earnings of 81 cents, according to Thomson Reuters I/B/E/S.
Results in the prior-year quarter included expenses of nearly US$1.9 billion related to Visa's purchase of Visa Europe.
Operating revenue jumped 26 per cent to US$4.57 billion, edging past analysts' estimates of US$4.36 billion.
Shares of Visa were up 1 per cent at US$99.12 in trading after the bell.