The relentless rise of e-commerce is fueling a boom in digital payments. Visa (NYSE:V) is a prime beneficiary of this megatrend, as evidenced by the credit and debit card network's 2018 fiscal first-quarter results. 

Visa results: The raw numbers


Q1 2018

Q1 2017

Year-Over-Year Change


$4.862 billion

$4.461 billion


Net income

$2.522 billion

$2.070 billion


Earnings per share




Data source: Visa Q1 2018 earnings press release (opens PDF).

What happened with Visa this quarter? 

Visa's net operating revenue rose 9% year over year to $4.9 billion, fueled by global economic growth as well as the growing percentage of retail sales taking place via online channels.

Payments volume increased 10% on a constant dollar basis, to $1.9 trillion. Strong growth in international markets such as Latin America (up 14%) and Visa's Central Europe and Middle East region (up 19%) complemented a 10% rise in U.S. payments volume. In turn, Visa's service revenue improved by 12%, to $2.1 billion.

CEO Alfred Kelly highlighted the impact of e-commerce on Visa's growth during a conference call with analysts:

Both offline and online volume had higher growth rates than the prior year, with online growing approximately four times faster than offline. During the holiday season, e-commerce continued to gain share, jumping to over 30% of consumer U.S. holiday volume.

One area of e-commerce that continues to grow rapidly is cross-border commerce. A cross-border transaction takes place when a merchant domiciled in one country makes a sale to a customer who pays with a credit card that's issued in another country.

Visa's cross-border volume rose 9% on a constant dollar basis in the first quarter. That helped the company's international transaction revenue rise 12%, to $1.7 billion.

In addition, Visa's data processing revenue leapt 13% to $2.1 billion, driven by a 12% jump in total processed transactions, to 30.5 billion.

Rising stacks of wooden blocks with the word e-commerce and an upward sloping arrow written over it

E-commerce is helping to drive Visa's revenue higher. Image source: Getty Images.

Visa's operating expenses, however, increased 13% year over year, mainly due to higher personnel costs. Operating income therefore increased 7% to $3.3 billion, as operating margin declined one percentage point, to 68%.

All told, net income, which benefited from a lower effective tax rate, surged 22% to $2.5 billion. And earnings per share -- boosted share repurchases -- soared 25% to $1.07.

Looking forward

Visa reiterated its fiscal 2018 full-year guidance for "high single digits" growth in net revenue and operating margin in the "high 60s."

The company also said that it now expects "high end of mid-20's" growth in adjusted earnings per share, up from its prior estimate of "high end of mid-teens" growth, due in part to the expected benefits of tax reform.

"Given the recent benefits from the Tax Cut and Jobs Act, we are evaluating ways to further invest in our business, our people, and our communities to digitize payments and contribute to overall economic growth," Kelly said in a press release.

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