Visa Inc. (V)

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Visa Inc. (V)

F1Q10 (Qtr End 12/31/09) Earnings Call

February 03, 2010 05:00 pm ET


Jack Carsky - Head, Global IR

Joe Saunders - Chairman & CEO

Byron Pollitt - CFO


Adam Frisch - Morgan Stanley

Jason Kupferberg - UBS

Julio Quinteros - Goldman Sachs

Craig Maurer - CLSA

Sanjay Sakhrani - KBW

Rod Bourgeois - Sanford Bernstein

Bruce Harting - Barclays Capital

Tien-Tsin Huang - JPMorgan

Dan Perlin - RBC Capital

Jim Kissane - Banc of America

Tom McCrohan - Janney

David Parker - Lazard

Tim Willi - Wells Fargo

Roger Smith - Macquarie

Robert Dodd - Morgan Keegan

Bob Napoli - Piper Jaffray



Welcome to Visa Incorporated fiscal first 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. Mr. Carsky, you may begin.

Jack Carsky

Thank you very much. Good afternoon and welcome to Visa Inc.’s fiscal first quarter 2010 earnings conference call. And again our sincerest apologies for what was pretty large technical difficulty. Today with us 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

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 those factors is available in the company’s filings with the SEC which can be accessed through the SEC's 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 on the financial and statistical summary accompanying our fiscal first quarter earnings press release. This release can also be accessed through the Investor Relations section of our website. With that I will turn the call over to Joe.

Joe Saunders

Thank you, Jack. As we begin our new fiscal year I am pleased to report that our first quarter results were indicative of both the continuing secular shift to electronic payments especially debit as well as some encouraging signs in spending domestically and internationally.

With that being said and consistent with our guidance expectations, it remains difficult to foresee how global economies will perform in the coming year, so we maintain cautious optimism about business results over the balance of 2010. Earnings for our first fiscal quarter on a GAAP basis were $1.02 per diluted share, a $0.28 or 38% increase over the first quarter of 2009. Net income on a GAAP basis was $763 million, a 33% increase over the year-ago period.

Recall that we will no longer be providing an adjusted basis for these metrics, but will adhere to the GAAP reported numbers going forward. Net operating revenues in the quarter were just under $2 billion, a 13% increase over the year-ago period and in line with our guidance as a result of solid payment volume and cross border volume growth as well as strong process transaction growth.

For the first time in our quarterly reporting, we are providing global payment volume growth in our operational performance data [pack] for the quarter just ended. These results which will still be recognized on a lag basis and reflected in fiscal second quarter service revenue show encouraging improvement over the fiscal first quarter.

Process transactions continue to grow from the mid to high single digit levels we saw over the course of fiscal 2009 ending the first quarter at 10.9 billion transactions, a 12% growth rate over the prior year period and up 9% from the growth reported for the fiscal fourth quarter.

I am pleased that we are executing well against our business plan. As we expand our payments network, growing issuers and acceptance locations, expanding our processing capabilities to driving transactions with effective marketing programs.

We are able to take full advantage of the secular trend to digital currency and grow our business. As a result even in this difficult economic environment, we are generating solid earnings and returning excess cash flow to our shareholders.

During the first quarter, we repurchased $432 million of our class A shares under our previously announced $1 billion buyback plan at an average price of just under $79 a share. We will continue to execute on this buyback as conditions warrant.

We also recently announced the unlocking of an additional 56 million shares of our class C stock which will allow class C shareholders, primarily our international financial institution owners the ability to further monetize their Visa investment ahead of the scheduled March 2011 unlock. This program has no dilutive effect on our earnings per share and is similar to the prior program we executed in July of last year.

With that, let me turn the call over to Byron who will take you through the details of our financial results and then I will be back to share our views on the economic environment and our upcoming March Investor Day.

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