Visa Inc. (V)

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Visa (V)

Q1 2011 Earnings Call

February 02, 2011 5:00 pm ET

Executives

Joseph Saunders - Executive Chairman and Chief Executive Officer

Jack Carsky -

Byron Pollitt - Chief Financial Officer and Principal Accounting Officer

Analysts

Adam Frisch - Morgan Stanley

Sanjay Sakhrani - Keefe, Bruyette, & Woods, Inc.

Craig Maurer - Credit Agricole Securities (USA) Inc.

Robert Napoli - Piper Jaffray Companies

Julio Quinteros - Goldman Sachs Group Inc.

Bryan Keane - Crédit Suisse AG

Christopher Mammone - Deutsche Bank AG

Tien-Tsin Huang - JP Morgan Chase & Co

Bruce Harting - Barclays Capital

Rod Bourgeois - Bernstein Research

Jason Kupferberg - UBS Investment Bank

James Kissane - BofA Merrill Lynch

Timothy Willi - Wells Fargo Securities, LLC

Glenn Greene - Oppenheimer & Co. Inc.

Presentation

Operator

Welcome to Visa Inc.'s Fiscal First Quarter 2011 Earnings Conference Call. [Operator Instructions] 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

Good afternoon, and welcome to Visa Inc.'s Fiscal 2011 First Quarter 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 and can be accessed on the Investor Relations section of our website at www.investor.visa.com. A replay of the webcast will also be archived on our site for 30 days. The 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. These include setbacks in the global economy and the impact of new financial reform regulations. Additional information concerning those factors is available in our last 10-K and the 10-Q and 8-K filings we filed with the SEC today. They can be accessed through its website, in the Investor Relations section of our website.

For historical non-GAAP and pro forma related financial information disclosed on 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 first quarter earnings press release. This release can also be accessed through the Investor Relations section of our website.

And with that, I'll turn the call over to Joe

Joseph Saunders

Thanks, Jack, and as always, thanks to all of you for joining us today. Visa began fiscal 2011 with another very strong quarter, delivering net operating revenues of over $2.2 billion, a 14% increase over last year. As has been the case for several quarters now, these revenue gains were driven by double-digit growth in payments volume, cross border volume and Visa-processed transaction from across the globe.

Net income for the quarter was $884 million, a 16% increase over the prior year. This equates to diluted earnings per share of $1.23, a 20% increase over the first quarter of 2010. As previously reported, early in October, we funded the litigation escrow by an additional $800 million, which has the same effect as the share repurchase. Later that month, our board authorized a $1 billion repurchase program, which we actively executed upon during the first quarter by buying over $300 million worth of shares. So we're off to a good start in terms of returning excess cash to our shareholders. Byron will provide more additional detail on the repurchase.

Nearly one year ago at Visa's inaugural Investor Day, we laid out our long-term strategy that would drive continued revenue growth. Key to this strategy is maintaining a dual focus on growing usage of our core products, which drives the majority of our revenue today while simultaneously advancing an aggressive innovation agenda to accelerate long-term growth through new platforms and channels.

During that same event, we also made a commitment to further diversify our business, including a long-term goal of ensuring our revenues more fully reflect Visa's global presence. We continue to make steady progress on achieving our aspiration of having more than 50% of revenue come from outside the United States by 2015.

Consistent with that objective, in this quarter, just over 60% of total revenue growth came from Rest of World. VisaNet is the key asset that enables Visa to deliver on these innovations and revenue diversity commitments. As we invest in long-term growth initiatives, we will maintain the unmatched scale, reliability, security and convenience that we deliver today. Our competitive advantages in this regard are significant. VisaNet's processing infrastructure is unparalleled in its capabilities, enabling us to deploy those assets and drive more volume and more value to networks and its participants.

Importantly, the flexibility of VisaNet allows us to leave the evolution of our industry towards payment into new technologies and form factors that will spur the future growth of this industry. To illustrate that point, I'd like to provide you with our most recent updates on key initiatives.

First, we will look at eCommerce and Money Transfer, two critical channels to driving usage of our products. Growing our eCommerce business remains a top priority for Visa and will be an area of increased emphasis in fiscal 2011. Our investments in this category to date are yielding results as we saw 25% year-over-year growth in eCommerce payments volume globally in Q1.

CyberSource enables us to accelerate growth of the eCommerce category overall by extending Visa's capability to deliver innovation to merchants, consumers and partners with services such as fraud management and payment security management. CyberSource got off to a great start in 2011, delivering 40% year-over-year growth in billable transactions in the first quarter.

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