Visa, Inc. F2Q10 (Quarter End 03/31/10) Earnings Call Transcript

Visa, Inc. F2Q10 (Quarter End 03/31/10) Earnings Call Transcript
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Visa Inc. (V)

F2Q10 Earnings Call

April 28, 2009 5:00 pm ET

Executives

Jack Carsky – Head Global Investor Relations

Joseph W. Saunders - Chairman of the Board & Chief Executive Officer

Byron H. Pollitt, Jr. - Chief Financial Officer

Analysts

Adam Frisch – Morgan Stanley

David Hochstim – Buckingham Research

Rod Bourgeois – Bernstein Capital

Mosche Orenbauch – Credit Suisse

David Long – William Blair

Tien-Tsin Huang – JP Morgan

Jason Kupferberg – UBS Securities

Christopher Mammone – Deutsche Bank

Julio Quinteros – Goldman Sachs & Co.

Sanjay Sakhrani – Keefe, Bruyette & Woods

Craig Maurer – CLSA

Robert Dodd – Morgan Keegan

James Kissane – Bank of America Merrill Lynch

Timothy Willi – Wells Fargo Securities

James Friedman – Susquehanna Financial Group

Moshe Katri – Cowen & Co.

Bruce Harting – Barclays Capital

Don Fandetti – Citigroup

Presentation

Operator

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Welcome to Visa Inc.’s fiscal second quarter 2010 earnings conference call. All participants are in a listen only mode until the question-and-answer session. Today’s conference is being recorded. If you have any objections you may disconnect at this time. I would now like to turn the conference over to your host, Mr. Jack Carsky, Head of Global Investor Relations.

Jack Carsky

Welcome to Visa Inc.’s fiscal second quarter 2010 earnings conference call. With us today are Joe Saunders, Visa’s Chairman and Chief Executive Officer and Byron Pollitt, Visa’s Chief Financial Officer. This call is currently being webcast over the Internet. It can be accessed on the Investor Relations section of our website at

www.InvestorVisa.com

.

A replay of the webcast will also be archived on our site for 30 days. A PowerPoint deck containing highlights of today’s commentary was posted to our website prior to this call. Let me also remind you that this presentation may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

By their nature forward-looking statements are not guarantees of future performance and as a result of a variety of factors actual results could differ materially from such statements. Additional information concerning these factors is available in the company’s filings with the SEC which can be accessed through the SEC website and the Investor Relations section of the Visa website.

For historical non-GAAP or pro forma related financial information disclosed in this call the related GAAP measures and other information required by Regulation G of the SEC are available in the financial and statistical summary accompanying our fiscal second quarter earnings press release. This release can also be accessed through the IR section of our website. With that, I’ll turn over the call to Joe.

Joseph W. Saunders

As we conclude the first half of our fiscal 2010, I’m increasing optimistic that the worst of the recession is behind is because we are finally beginning to see evidence of a pickup in spending domestically and internationally. This was apparent in the results of our fiscal second quarter as strong year-over-year payments volume and revenue gains were delivered in every area of our business.

However, while we are increasingly more comfortable the economic environment in which we are operating, we remain watchful of the longer term sustainability of growth in the world economy. Earnings for our second fiscal quarter on a GAAP basis were $0.96 per diluted share, a $0.25 or 35% increase over the second quarter of 2009. Net income on a GAAP basis was $713 million, a 33% increase over the year ago period.

Net operating revenues in the quarter were just under $2 billion, a 19% increase over the year ago period as a result of stronger than anticipated payments volume, cross border volume and process transaction growth coming from all areas of the globe. Byron will get in to the details but overall we are very pleased with our results and we remain cautiously optimistic that we will continue to see solid trends going forward.

Process transaction growth continued to accelerate over the quarter ending the period at 14% on a year-over-year basis with over 10.6 billion transactions processed over Visa net. This is up from the 12% growth rate we experienced last quarter and well ahead of the same period a year ago when process transactions grew 6%.

With these trends we are increasingly optimistic that our net revenue growth will now come in at the high end of our 11% to 15% range. While we delivered 16% growth year-to-date keep in mind that we lap last year’s data processing price increase at the end of the June quarter. In addition, consistent with our annual plan and guidance, we are projecting modestly higher rebates and incentives in the back half of the year. Byron will provide greater detail on this.

As you know, last week we announced an agreement to acquire CyberSource. It’s a strong fit with our long term strategic view of eCommerce and is complemented by its ability to deliver incremental benefits to our financial institution customers and their cardholders. While we’d be happy to entertain any outstanding questions you may have at the end of this call, please keep in mind that because CyberSource shareholder approval is still pending we will not be able to go in to any more detail on the transaction than we did last week.

I would refer you back to the presentation and transcript of our comments from the conference call. Additional information regarding the transaction will be available in the forth coming registration statement Form S4 which will be filed with the SEC in due course. All-in-all we continue to execute well against our business plan. Our management team remains very focused on further expanding our payments network globally by growing issuance and acceptance locations, by expanding our processing capabilities, by adapting our products and services to fit the need of individual markets and by driving transactions with effective marketing programs.

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