Visa Inc. Raises Full-Year Outlook

Visa (V -0.59%) reported fiscal second-quarter results on April 25. The world's largest payments network is enjoying accelerating revenue growth, prompting it to boost its sales and profit forecast for the year ahead. 

Visa results: The raw numbers

Data source: Visa Q2 2018 earnings press release.

What happened with Visa this quarter?

Payments volume for the quarter ending Dec. 31 grew 10% after adjusting for the effects of currency fluctuations, to $2.033 trillion. In turn, Visa's service revenue increased by 13%, to $2.3 billion.

For the quarter ending March 31, payments volume rose 11% to $1.99 trillion, fueled by rising global debit card usage. "Debit growth of 11% was up 2 percentage points versus last quarter with both U.S. debit and international debit growth accelerating by similar amounts," CEO Alfred Kelly said during a conference call with analysts.

Cross-border volume -- which includes transactions that occur when a merchant domiciled in one country makes a sale to a customer that pays with a credit card issued in another country -- also saw solid growth, rising 11% on a constant dollar basis. That helped Visa's international transaction revenue increase by 19%, to $1.8 billion.

Additionally, a 12% jump in total processed transactions, to 29.3 billion, fueled a 15% rise in Visa's data processing revenue, to $2.1 billion.

"Visa had a terrific second quarter," Kelly said in a press release. "Revenue growth was better than anticipated and many of our key business drivers accelerated compared to the first quarter, including strong growth in cross-border and payments volume."

Visa is seeing accelerating growth in several of its most important markets. Image source: Getty Images.

Still, Visa's adjusted operating expenses increased by 18% year over year, mostly due to higher personnel and marketing costs. In turn, adjusted operating income increased 11%, to $3.3 billion, as operating margin declined 1 percentage point, to 66%. 

All told, adjusted net income -- which benefited from a significantly lower effective tax rate brought about by the Tax Cuts and Jobs Act -- jumped 26% to $2.6 billion. And adjusted earnings per share -- boosted by the $3.75 billion in share repurchases Visa conducted over the first two quarters of fiscal 2018 -- soared 30% to $1.11.

Looking forward

These strong results prompted Visa to boost its fiscal 2018 full-year financial outlook, which now includes:

• "Low double-digits" net revenue growth, up from prior expectations for "high single digits" growth.
• Adjusted earnings-per-share growth in the "high-20s," up from "high end of mid-20's."

"The fundamentals of our core business remain robust around the world and our team continues to execute against the company's long-term growth strategy," Kelly said. "Based on our first half results, we are raising our revenue and profit outlook for the year."