Visa Posts 16 Percent Jump in Profit

Visa Inc. on Wednesday said its fiscal first-quarter profit rose 16 percent, as debit card use continued to grow and consumers returned to using credit cards.

The San Francisco company said net income for the three months ended Dec. 31 rose to $884 million, or $1.23 per share, from $763 million, or $1.02 per share, in the 2009 period.

Revenue rose across all of the world's largest payments processing network's main businesses, gaining 14 percent to $2.24 billion, compared with $1.96 billion the prior year.

Visa said its growth was driven by higher payments volume both in the U.S. and globally. The total number of transactions handled in the quarter rose 15 percent to 13 billion.

The results topped Wall Street expectations. Analysts were expecting profit of $1.20 per share on $2.22 billion revenue, according to data provided by FactSet.

Shares, however, slipped in afterhours trading. The stock gave up 94 cents, to $71.15, after closing up $1.39, or 2 percent, at $72.09.

UBS analyst Jason Kupferberg suggested investors may have been disappointed that Visa's results did not exceed expectations by a larger margin. The company often posts stronger numbers than Wall Street predicts.

Nevertheless, he said that the quarter was strong, there were no major surprises and the increase in global spending on cards was positive. Higher consumer spending "started to emerge over the last couple of quarters, and now seems to be gaining a little traction," he said.

The company did not offer any comments regarding regulatory issues, which have been weighing on the stock. Kupferberg said he expected those matters to be raised during the conference call to discuss results.

Chairman and CEO Joseph Saunders, in a statement, called the results a "great start" to the company's fiscal year. He said the company is "intensely focused" on increasing global revenue, He pointed to efforts to expand card use in countries where cash and checks still dominate and its money transfer business as keys, along with investments in new technologies like mobile payments and ecommerce.

U.S. credit card use, which dropped off during the recession, rose 7.5 percent. U.S debit card use jumped 16 percent.

International credit card use saw a 20 percent bump. Global debit card use, a much smaller business, rose 34 percent.

The company said it continues to expect better-than-20 percent earnings per share growth for the year, implying earnings of at least $4.84 per share. Wall Street was expecting, on average, $4.80 per share, with estimates ranging from $4.57 to $5.01.

Visa also kept its forecast for revenue growth between 11 and 15 percent for the new fiscal year, implying guidance ranging between $8.95 billion and $9.11 billion. Wall Street expects $9.05 billion in revenue, with estimates ranging from $8.65 billion to $9.29 billion.