Visa posted a fiscal third-quarter profit that beat analysts' estimates as global spending on credit and debit cards climbed.
Net income for the three months ended June 30 was $1.23 billion, or $1.88 a share, compared with a loss of $1.84 billion, or $2.74, a year earlier that included a litigation expense, the Foster City, California-based company said today in a statement. The average estimate of 33 analysts surveyed by Bloomberg was for earnings of $1.80 a share. Profit excluding special items from the third quarter of 2012 climbed 16%.
Chief Executive Officer Charlie Scharf is seeking to bolster Visa's business outside the U.S., where it gets more than half its revenue, as consumers worldwide continue to migrate from cash and checks to electronic payments. The company has returned more than $14 billion to shareholders since 2008.
"From a longer-term perspective, we continue to believe that Visa is the single best way" to harness returns amid the shift away from cash, Greg Smith, an analyst at Sterne Agee & Leach Inc., wrote in a July 21 report. "We expect the company to consistently generate at least mid-teens" earnings-per-share growth, he said.
Visa fell 1% to $186.75 at 4 p.m. in New York. The shares climbed 23% this year, outpacing the 9.3% advance for the 70-company Standard & Poor's 500 Information Technology Index.
Last year, Visa and No. 2 network MasterCard Inc. agreed to a $7.25 billion settlement over the fees charged to merchants when consumers pay with credit cards. Visa sued Wal-Mart Stores Inc. last month to stop the biggest U.S. retailer from filing a lawsuit that would prolong the eight-year legal battle the settlement seeks to end.
The payment networks also face a cap on fees charged in the European Union. Purchase, New York-based MasterCard asked the EU's highest court to overturn a decision forcing the company to reduce interchange rates, which determine the swipe fees charged to retailers. Visa Europe Ltd., operator of the EU's largest payment-card network and a separate entity from Visa Inc., proposed a settlement of a similar case that is being reviewed by the European Commission.
Scharf, 48, has pledged to be more flexible in responding to the demands of Visa's bank customers and in February the company reached agreement with JPMorgan Chase & Co., the biggest U.S. card issuer, to let the lender tailor payment solutions for merchants.
American Express Co., the New York-based card issuer that also runs the third-largest U.S. bank-card network, said July 18 that second-quarter profit rose 4.9% to $1.41 billion as customer purchases increased. Riverwoods, Illinois-based Discover Financial Services, the No. 4 network, said yesterday that quarterly net income climbed 15% to $602 million. MasterCard is set to report results July 31.